A pricing strategy where companies charge the maximum amount customers are willing to pay.
A buyer's market is an economic situation where the supply of goods or assets exceeds demand, giving buyers an upper hand in negotiations over sellers. This term is widely used in the real estate sector to describe conditions where property buyers have an abundance of choices and leverage to negotiate lower prices.
Change in demand and change in quantity demanded are key concepts in economics. The former involves shifts due to changes in factors like income or consumer preferences, whereas the latter is caused by price changes and results in movement along the demand curve.
Competition refers to the rivalry in the marketplace wherein goods and services are bought from those who provide 'the most for the money.' It rewards efficient producers and suppliers, driving the economy toward the efficient use of resources.
Competitive equilibrium refers to a market state where supply equals demand, resulting in an equilibrium price where no buyer or seller has an incentive to change their behavior.
Complementary goods are products that are often consumed together, where the demand for one increases when the price of the other decreases, and vice versa.
A demand schedule is a table that showcases the relationship between the price of a good or service and the quantity demanded at different price levels. It is a fundamental concept in economics that helps illustrate consumer behavior and market dynamics.
A duopoly is a form of oligopoly where only two firms dominate the entire market. This market structure can lead to unique competitive behaviors and economic outcomes. The two dominant firms may collaborate or compete aggressively, impacting market prices, output, and overall industry dynamics.
Elasticity of supply and demand measures the responsiveness of quantity supplied or demanded to changes in price. These metrics are fundamental in understanding market dynamics and predicting how various factors influence the market.
Comparing two types of changes that impact production systems—changes stemming from internal market dynamics and those arising from external factors such as consumer preferences and technological innovations.
Leakage refers to the loss of potential business revenue when customers choose to spend their money on goods or services outside of a given company or location.
Market equilibrium is a situation in a market where the prevailing price causes producers to produce exactly the quantity demanded by consumers at that same price. A market in equilibrium will not experience changes in price or quantity produced.
Porter's Five Forces is a powerful framework for analyzing the competitive forces that shape every industry, and it helps determine an industry's weaknesses and strengths. Developed by Michael E. Porter, it provides insights into the five forces that drive competition within an industry and influence its overall profitability.
Price inelasticity refers to a situation in which the demand for a product or service is not significantly affected by changes in its price. This phenomenon occurs when consumers have few or no substitutes for the product or when it represents a small portion of their budget.
In an oligopolistic industry, a price leader is the firm whose output pricing decisions are most likely to be matched by other firms. This role sets the industry standard for pricing and significantly influences market dynamics, leading to reduced competition.
Pricey refers to products or services offered at prices at or near the top of what the market will bear, or in investment terms, offering or bidding prices that are significantly above or below the current market value.
Profit taking is the action by short-term securities or commodities traders to cash in on gains earned on a sharp market rise. It can result in temporary downward pressure on prices.
Revenue evaporation is a significant drop in income from the sale of a product or service, often due to fundamental changes in the market, such as technological innovations.
Substitutes are products or services that can be used in place of each other, fulfilling similar needs or functions. Substitutes play a crucial role in determining market dynamics and consumer choices.
Supply refers to the total amount of a commodity that producers are willing and able to sell at various price levels in a given time period. In economic terms, supply is a fundamental concept related to the available production capacity and market pricing dynamics.
The Supply Price corresponds to the specific price level at which producers are willing to supply a particular quantity of goods or services, as indicated by a supply schedule or supply curve.
Windfall profit is a sudden, unexpected gain resulting from an event that is not controlled by the person or company benefiting from it. These profits often arise due to external factors such as natural disasters, government regulation changes, or sudden shifts in market dynamics.
