Homework Help

BUYERS ALWAYS PREFER LOWER PRICES TO HIGHER PRICES .DO YOU AGREE OR DISAGREE WITH THIS...

user profile pic

jhghjhygt | Student, Undergraduate | eNotes Newbie

Posted October 28, 2009 at 5:05 AM via web

dislike 1 like

BUYERS ALWAYS PREFER LOWER PRICES TO HIGHER PRICES .DO YOU AGREE OR DISAGREE WITH THIS STATEMENT?EXPLAIN YOUR ANSWER.

DOES THIS HAVE TO DO WITH PRICE CELINGS IN THAT IT OFFRES LOWER PRICES BUT HAS THE NEGATIVE SIDE EFFECTS?

5 Answers | Add Yours

Top Answer

user profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted October 28, 2009 at 5:11 AM (Answer #1)

dislike 2 like

As long as you say "all other things being equal" I would agree with this statement.

In other words, there are some things that could make a buyer prefer a higher price.  The main thing that could do this would be if the good or service that has the higher price is better (either truly better or just in the buyer's perception) than the one with the lower price.

It has been shown that goods that are priced lower than competing goods can, at times, be perceived as inferior.  In this case, the more expensive good will be preferred.  (So economically speaking there is higher demand for that good or service.)

However, if the goods are perceived as equal in quality, the statement should hold.

I do not believe that this is connected to price ceilings.  Price ceilings are artificial caps put on prices and they simply make it so there are no choices that are more expensive than the level of the cap.

user profile pic

jhghjhygt | Student, Undergraduate | eNotes Newbie

Posted October 28, 2009 at 5:18 AM (Answer #2)

dislike 0 like

BUT POHNPEI397 I MUST DISAGREE WITH YOU BECAUSE DOES IT FOLLOW THAT BUYERS PREFER PRICE CEILINGS TO EQUILIBRIUM PRICES BECAUSE WE BUYERS PREFER LOWER THANN HIGHER PRICES.NOT NECESSARLY SO BECAUSE PRICE CELINGS COME WITH SHORTAGES AND FIRST COME FIRST SERVE AS THE RATIONING DEVICE. SO I MUST DISAGREE.

user profile pic

owlbarf | eNotes Newbie

Posted October 28, 2009 at 2:52 PM (Answer #3)

dislike 0 like

Price ceilings limit profitability. Historical trends reveal if there is limited profit available, companies focus on producing the product in the cheapest manner possible, resulting in decreased quality. A lack of ceilings encourage companies to invest part of the profits in research and development, which trends towards a higher quality product created with advanced technology. Lack of ceilings also encourage product branding, or companies producing a higher quality product under one label and a lower quality (and cost) product under another, usually generic, label.

user profile pic

babani | Student | eNotes Newbie

Posted November 30, 2009 at 8:22 PM (Answer #4)

dislike 0 like

BUYERS ALWAYS PREFER LOWER PRICES TO HIGHER PRICES .DO YOU AGREE OR DISAGREE WITH THIS STATEMENT?EXPLAIN YOUR ANSWER.

user profile pic

babani | Student | eNotes Newbie

Posted November 30, 2009 at 8:29 PM (Answer #5)

dislike 0 like

answer as selected by question asker.

As long as you say "all other things being equal" I would agree with this statement.

In other words, there are some things that could make a buyer prefer a higher price.  The main thing that could do this would be if the good or service that has the higher price is better (either truly better or just in the buyer's perception) than the one with the lower price.

It has been shown that goods that are priced lower than competing goods can, at times, be perceived as inferior.  In this case, the more expensive good will be preferred.  (So economically speaking there is higher demand for that good or service.)

However, if the goods are perceived as equal in quality, the statement should hold.

I do not believe that this is connected to price ceilings.  Price ceilings are artificial caps put on prices and they simply make it so there are no choices that are more expensive than the level of the cap.

Join to answer this question

Join a community of thousands of dedicated teachers and students.

Join eNotes