管理经济学（英文）Ch10_Pricing_Strategies_for_the_Firm教材教学课件.pptVIP

10.* ? 2005 Prentice Hall, Inc. 10.* ? 2005 Prentice Hall, Inc. Economics for Managersby Paul Farnham Chapter 10: Pricing Strategies for the Firm Markup Pricing Firms establish production costs, then apply a markup to the average cost to determine price Markup pricing is considered a means of dealing with uncertainty in demand estimation Applying uniform markup to all products would not be profit-maximizing strategy Process of Applying Markups Establish a mathematical relationship between marginal revenue and the price elasticity of demand Review the profit-maximizing role of equating marginal revenue and marginal cost Show how marking up price above the average cost of production is equivalent to pricing according to the profit-maximizing rule Marginal Revenue and Price Elasticity of Demand MR = ( TR) Q Eq. 10.1 Definition of marginal revenue (change in TR divided by change in quantity) Expresses change in total revenue as price is lowered along a demand curve TR = (P) ( Q) + (Q) ( P) Eq. 10.2 Marginal Revenue and Price Elasticity of Demand Simplified version of Eq. 10.3 Q MR = P + Q * P Eq. 10.4 Expresses definition of MR using definition of change in TR from Eq. 10.2 Q Q MR = P * + Q * Q P Eq. 10.3 P P] MR = [P + Q * Q P Eq. 10.5 Marginal Revenue and Price Elasticity of Demand P Q MR = P (1 + * Q P) Eq. 10.6 ep MR = P (1 + 1) Eq. 10.7 Last term is the inverse of price elasticity of demand Shows the formal relationship between MR and price elasticity Profit-Maximizing Profit-maximizing rule: a firm should produce that level of output where MR equals MC Now, adding economic theory and mathematics of optimization, it can be used in markup, when the size of the markup is inversely related to the price elasticity of demand Profit-Maximizing ep P = (1 + 1) = MC Eq. 10.9 Last term is the inverse of price elasticity of demand P = MC = MC / [ep + 1) / ep] ep (1+1) Eq. 10.10 Managers can Use simple cost-based pricing to