Economic Unit 8 discussion reply.docx

Economic Unit 8 discussion reply.docx - Richard it may not...

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Richard, it may not seem fair to the consumer to pay more for their products in order for retailers to achieve their marginal and revenue cost objectives. Nevertheless, it is a well-known fact that pricing is an essential feature in retail businesses. Retailers depend on pricing to develop their gross margin, especially when operating grocery stores. However, despite the significant relationship to profitability, pricing is usually the most disorganized part of the retail operation. Retailers seeking to expand their profits should focus on margin instead of markup. In the case of grocery chains, and selling products with a short life span, the retailer should evaluate product output and input. In summary, if marginal revenue exceeds the marginal cost, the retailer can earn more profit by increasing output. However, if the marginal revenue is below the marginal cost, the retailer will lose money and should reduce their output. Finally, if the profits
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