You are asked to look around you and observe the pricing strategies businesses use to maximize their profits. This assignment will be a case study. Select a case* and describe its pricing strategy in detail. Analyse the rationale behind it using relevant economic theories. In your analysis, you are advised to include any relevant background information that may help the reader understand its pricing strategy. You should also discuss implications of this pricing strategy in terms of consumer and producer welfare, allocative efficiency and other relevant economic concepts.
* Note: You can choose more than one case. If you analyse two or more cases, make sure they are sufficiently different. There is not much point to present several similar cases and repeat the same analyses.
Guide to Topic 1
It is important to note that you should apply economic principles to your case(s) to demonstrate your thorough understanding of them. It is how well you understand and apply economic concepts and theories that will determine your grade in this assignment.
There are lots of places to get you started. The catalogs in your mailbox, the price list outside a business (e.g. the entrance of a car park, a hair-dresser), price discount or bonuses (e.g. a free printer) are just a few examples. Your marker will certainly be impressed if you can come up with novel cases.
The solution discusses implications of pricing strategy in terms of consumers and producers welfare, allocative efficiency and other relevant economic concepts.