| London’s Market Bar has a unique pricing system where a computer sets the price based on demand. When demand picks up, the computer begins to gradually reduce prices. This pricing strategy is puzzling to those who have studied supply and demand. Celene Berman, the assistant manager, says a group of “young city-boy types” recently kept asking why prices “were going the wrong way around.” Explain, using your knowledge of block pricing, why the owner’s strategy of reducing prices as sales increase might actually lead to increased profit for the bar. |
