Dynamic pricing refers to the practice of

Question

BlackTom AI · Accepted Answer

To begin, let's restate the question and the available options to ensure clarity about what's being evaluated.
Question: Dynamic pricing refers to the practice of
Options:
1) charging the same price for the same products and services, regardless of supply and demand or shopping conditions.
2) changing prices for products and services in real time in response to supply and demand conditions.
3) charging different prices for products and services online than in traditional marketplaces.
4) starting with a high initial price to recuperate production costs.
5) starting with a low initial price to attract the mass market.

Now, let's analyze each option in turn.

Option 1: Charging the same price for the same products and services, regardless of supply and demand or shopping conditions.
This statement describes a fixed pricing strategy, not dynamic pricing. It ignores how prices can be flexible in response to market signals, so it does not capture the defining feature of dynamic pricing.

Option 2: Changing prices for products and services in real time in response to supply and demand conditions.
This option captures the core idea of dynamic pricing: prices adjust procedurally and promptly as supply levels and demand pressures change. It reflects the real-time responsiveness and market-driven nature that dynamic pricing embodies, making it the accurate description.

Option 3: Charging different prices for products and services online than in traditional marketplaces.
While online pricing can be dynamic, this option emphasizes a channel-based price difference rather than a time- and condition-based adjustment. Dynamic pricing is not defined by the channel (online vs offline) but by the speed and responsiveness to market conditions, so this option is incomplete or misleading as a general definition.

Option 4: Starting with a high initial price to recuperate production costs.
This resembles a skimming or cost-based pricing strategy, not dynamic pricing. It focuses on a pricing approach over time but does not involve ongoing real-time adjustment to supply and demand.

Option 5: Starting with a low initial price to attract the mass market.
This describes a penetration pricing approach or loss-leveraging strategy, not dynamic pricing. It emphasizes market entry tactics rather than continuous price adaptation to market conditions.

Summarizing the reasoning for each option: option 1 wrongly asserts price rigidity; option 2 correctly identifies real-time, market-responsive price changes; option 3 conflates channel differences with the mechanism of adjustment; options 4 and 5 describe other strategic pricing concepts not tied to ongoing dynamic adjustments.

Overall, option 2 provides the most accurate and complete characterization of dynamic pricing, as it conveys the essential mechanism of price adjustments in response to supply and demand in real time.

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MKT*2500*02.2025FA POM Chs 15 - 17- Requires Respondus LockDown Browser

Dynamic pricing refers to the practice of

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