A factor that reduces the value of an improvement because of something external to the property itself. A well-built and well-maintained house may suffer economic obsolescence because it is located on one acre of land in the middle of a fast-food area on a major suburban road. The improvement—the house—no longer has any value at all. In this example, though, that hardly matters because the land is worth vastly more than the original homeowners ever dreamed.

Custom Products Product designed and built by the vendor exclusively for the customer per the customer’s specifications. Also called specialty product or application.

Shopping Around To go to various shops or suppliers and compare prices before making a purchase or before placing an order ExamplesYou should shop around before getting your car serviced. • He’s shopping around for a new computer. • It pays to shop around when you are planning to get a mortgage.

Custom Operated Machines

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Pricing Policies Pricing policy in economics generally refers to the method of decision making that is used to set prices for a company’s goods or services. The policy assists in determining prices based on various social and economic factors such as cost of production. It also relies on provision with a margin for profit.

Administered Pricing The price of a good or service as dictated by a governmental or other governing agency. Administered prices are not determined by regular market forces of supply and demand. Examples of administered prices included price controls and rent controls. Administered prices are often imposed to maintain the affordability of certain goods and to prevent price gouging during periods of shortages (such as gas prices). Rent controls are intended to stabilize rent in certain cities, where rents are reviewed by a standard of reasonableness. When supply and demand for the good change, the administered price may change to subsidize the supplier or protect the consumer. Suggested Retail Prices

The amount of money for which the company that produces a product recommends that it be sold in stores. MSRP does not necessarily correspond to the price retailers actually use or to the price customers are willing to pay. Retailers may need to set their prices below MSRP to move inventory, especially for items with low demand or in a sluggish economy. One industry in which MSRP is frequently used is in car sales, where it must be displayed on a sticker on the car’s windshield or on a spec sheet on one of the car’s windows. The MSRP can help the customer determine a fair price to pay for the vehicle. The concept of MSRP exists in many industries, but outside of the auto industry it often has a different name, such as “list price.”


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