Match the items of List – I with those of List – II and indicate the correct code from the following :…
Loss leader pricing is a classic product line pricing strategy where one item is priced low to attract customers to the rest of the line, and postage stamp pricing is…
Choose your answer
Match the items of List – I with those of List – II and indicate the correct code from the following :
List – I
List – II a. Postage stamp pricing i. Equality of marginal and average cost b. Loss leader ii. Constant average and marginal cost c. Economic capacity iii. Product line pricing d. Reserve capacity iv. Differential pricing
Answer and explanation
Correct answer B
Loss leader pricing is a classic product line pricing strategy where one item is priced low to attract customers to the rest of the line, and postage stamp pricing is contrasted with differential geographical pricing. Economic capacity occurs at the minimum point of the average cost curve where marginal and average costs are equal, whereas reserve capacity features constant average and marginal costs.
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UGC NET Commerce