Pricing schedule explained

A pricing schedule is a function that maps the quantity of a good purchased to the total price paid.

Types of pricing schedules

• Linear Pricing Schedule - A pricing schedule in which there is a fixed price per unit, such that where total price paid is represented by T(q), quantity is represented by q and price per unit is represented by a constant p, T(q) = pq ^[1]
• Nonlinear Pricing Schedule - Nonlinear pricing is a pricing schedule in which quantity and total price are not mapped to each other in a strictly linear fashion^[2]
  • Affine Pricing - An affine pricing schedule consists of both a fixed cost and a cost per unit. Using the same notation as above, T(q) = k + pq, where k is a constant cost.^[3]

Notes and References

1. http://economics.about.com/library/glossary/bldef-linear-pricing-schedule.htm Linear Pricing Schedule
2. http://economics.about.com/cs/economicsglossary/g/nonlinear.htm Nonlinear Pricing
3. http://economics.about.com/cs/economicsglossary/g/affine_pricing.htm Affine Pricing