In psychological pricing the firm takes advantage of the fact that many consumers use price as an indication of quality.

Question

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Psychological pricing is based on the concept that consumers perceive certain price points as an indication of quality or value. For example, a higher price point may be perceived as a higher quality product, while a lower price point may be perceived as a cheaper or inferior product. By pricing their products strategically, firms can take advantage of these consumer perceptions to improve sales and profitability.

In Psychological Pricing the Firm Takes Advantage of the Fact