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10 Activity 1

The document discusses factors of price theory and assumptions of prospect theory. It provides examples of each, such as: 1. Demand and supply are factors of price theory, with demand representing desire for goods and supply representing what the market can provide. 2. Moon prices and better to pay in cash are assumptions of prospect theory, with moon prices being discounts and prospect theory stating negative utility is greater when paying personally. 3. Equilibrium in price theory is when supply and demand balance resulting in stable prices. It also lists and explains pricing strategies such as markup pricing which adds a percentage to costs for profit, and break-even pricing which determines the point of no profit or loss. Target-

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167 views2 pages

10 Activity 1

The document discusses factors of price theory and assumptions of prospect theory. It provides examples of each, such as: 1. Demand and supply are factors of price theory, with demand representing desire for goods and supply representing what the market can provide. 2. Moon prices and better to pay in cash are assumptions of prospect theory, with moon prices being discounts and prospect theory stating negative utility is greater when paying personally. 3. Equilibrium in price theory is when supply and demand balance resulting in stable prices. It also lists and explains pricing strategies such as markup pricing which adds a percentage to costs for profit, and break-even pricing which determines the point of no profit or loss. Target-

Uploaded by

•MUSIC MOOD•
Copyright
© © All Rights Reserved
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Javellana Jessel G.

BSBA-OM 201A

Exercise 1
Directions: In no more than three (3) sentences, identify if the
given item is a factor associated with price
theory or an underlying assumption of prospect theory and explain
its concept. Write your answers on the
space provided. (6 items x 5 points)

1. Demand- this item is a factor that is associated with price


and it is a desire of a market that it can be a tangible or
intangible item. Example for tangible is clothes and for the
intangible is housekeepers.
2. Moon prices- in this item it is underlying assumption of
prospect theory and Moon price occurs when the certain store or
company offers a discount for example the original price of the
shoes is 500 and they will offer a 20% discount.
3. Equilibrium- the equilibrium belongs in the price theory Image
result for Equilibrium is the state in which market supply and
demand balance each other, and as a result prices become stable.
The balancing effect of supply and demand results in a state of
equilibrium.
4. Supply-this item is a factor of price theory and supply is the
service or a product that market can provide it is also included
tangible goods such as furniture and intangible such as the
ability to make an appointment to a skilled service provisors.
5. Free or paid- this term is underlying assumption of prospect
theory and the prospect theory explains that the negative utility
is greater when a product or service is paid personally by a
consumer.
6. Better to pay in cash- this term is underlying assumption of
prospect theory and this e prospect theory clarifies that the
negative utility from a money installment is more prominent in
contrast with a credit only or credit/check card installment.

Exercise 2
Directions: List down four (4) pricing strategies and explain the
concept of each in no more than three (3)
sentences. Write your answers on the space provided. (4 items x 5
points)
Javellana Jessel G. BSBA-OM 201A

 Markup pricing- This strategy is assessing various cost and


adding a percentage in a original price and it will be serve
as profit
 Break-even pricing- it involves determining the point
wherein an organization would incur neither profit nor loss.
 Rate-based pricing- includes valuing an assistance dependent
on hourly evaluating model. Specialists, specialists, and
mentors most ordinarily utilize this system for estimating
their administrations
 Target-return pricing- It includes setting the cost of an
item or administration at a level, which will yield target
pace of profit from venture made by the organization.

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