Which of the following pricing strategies does not usually enhance the profits of firms with market power?
A)Marginal cost pricing.
B)Price discrimination.
C)Block pricing.
D)Commodity bundling.

Question

Quizplus · Accepted Answer

Marginal cost pricing is when a firm sets its price equal to its marginal cost, which means that the firm earns no profit. This strategy is usually used by firms in competitive markets to drive out rivals or by firms with the government as a customer. However, firms with market power (ability to set prices above marginal costs) would not use this strategy as it would not enhance their profits. The other pricing strategies listed (price discrimination, block pricing, and commodity bundling) all have the potential to enhance the profits of firms with market power.

Which of the Following Pricing Strategies Does Not Usually Enhance