Question
To maximize profits, businesses in imperfectly competitive markets (i.e., markets where the businesses face downward sloping demand curves) should consider their customers' willingness to pay.
To maximize profits, businesses in imperfectly competitive markets (i.e., markets where the businesses face downward sloping demand curves) should consider their customers' willingness to pay. This was the point of our review of monopoly pricing and price discrimination strategies. Beyond monopoly pricing based on the rough shape of demand curves, there are a number of more detailed pricing tweaks that firms can apply to help maximize their profits. For example, to the extent that consumers are not paying close attention prices, sometimes businesses can take advantage of that fact. For example, sometimes cell phone service providers may give a customer a deal on a phone, but then overcharge for the phone service. Similarly, when it comes to computer printers, in some cases printers are sold well below manufacturing costs with the difference made up with high mark-ups on the sale of printer cartridges, etc. In a different context, in some cases when the cost of meterials and proc
In this context, Explain an outlining under what circumstances you believe businesses are most likely to be successful in using strategies that divert the consumers' attention away from the real price that the consumer is being charged.
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