Define price and discuss the two roles price plays in the evaluation of product alternatives.
What will be an ideal response?
Price is that which is given up in an exchange to acquire a good or service. Price plays two roles in the evaluation of product alternatives: as a measure of sacrifice and as an information cue. Since price is "that which is given up," it means what is sacrificed to get a good or service. In the U.S., that usually means money, but it can mean other things as well. It may also be time lost while waiting to acquire the good or service. The information effect of price implies that many consumers use price as an indication of quality. That is, higher quality equals higher price. The information effect of price may also extend to favorable price perceptions by others because higher prices can convey the prominence and status of the purchaser to other people.
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