So I’m looking at this Autozone ad for a Jensen MP3 car receiver that’s on sale for 70 bucks. Pretty cheap I’m thinking, but it’s really got me wondering how and who comes up with these prices. Now, I’m just starting on my microeconomics class, and I’ve already read this thread:
http://boards.straightdope.com/sdmb/showthread.php?t=179283&highlight=market+prices+determined
Haven’t really gotten my answer from either. I don’t mean what determines prices in general, with supply-and-demand and all that. I mean, how in the world did the higher-up at Autozone decide that this particular model should be dropped down to this particular price on this particular week? Did they have experimental prices in other regional markets? Did the Jensen company decide to slash their prices on this model because they’re about to discontinue it and then Autozone decided to pass the savings on to the consumer? Do they have guys with lots of experience who just know that people will start buying crappy Jensen receivers if you drop it down by 50 bucks?
And a bonus cookie to anyone who’s willing to take the time out to answer this other market question: how do businesses decide on the initial price for their products? I don’t remember the iPods really dropping down in price from the day they’re introduced, but they seem to have hit it right on target, because the nano supply is juuuusttt keeping up with the rate that they’re flying off the shelves. Did they just send out surveys, compare their product to those already on the market, or what?
Edjamakate me!