When everything else is equal and you're only changing price, you're not changing demand.

Then auctions like eBay are another example of dynamic pricing.

Expectations... Expectations... of future prices. So let's say...

Maybe it goes to 2 in 2010.

Now remember the only thing we're varying here is the price.

And I think you already get the sense that the lower the

(Laughter)

This is 2009 estimates.

And B is expected to make 4 per share.

That was a bit of a diversion.

Why wouldn't I just pour all of my money?

You're making 10 , and that's just to connect the dots.

It was 10.

So it has a Price to Earnings of 50.

And let's say Company B made 5 per share. 5 EPS, Earnings Per Share.

The price varies with demand.

And you're going to pay a lower Price to Earnings ratio if the company isn't growing.

Because you're getting the same earnings for a lower price.

Price

The price of gold fluctuates daily.

Pay careful attention the next time you read the financial news.

But there's another type of pricing.

If you ever think about it, pricing that you negotiate yeah, we kind of have this price on paper, but that's just the starting point of the conversation.

Obviously a 6 Price to Earnings of 20 times 2013 earnings isn't as good as a 6 Price to Earnings of 2010, because earnings in the future aren't worth as much as earnings today.

And that's the real big take away I wanted you to get at, is that high utilization of anything, of our aggregate capacity, prices will increase.

And the earnings on the bank account in that year were 200.

As delta x aproaches zero of change in y over your change in x and when you do that you are going to approach that instantaneous rate of change you could view it as instantaneous slope at that point of the curve.

We've been talking about the law of demand and how if we hold all else equal, a change in price, price goes up, the quantity demanded goes down and the price goes down, the quantity demanded goes up.

He put up a notice about the change in price.

That just means that the last three yield management, real time, and auctions are examples of dynamic pricing.

Think about it in terms of the cards.

So this is 100 meters over 9.58 seconds.

And this is one of those conventions of economics that I am not a fan of, because people often talk about changing the price and how the quantity demanded changes from that.

One is, you could kind of flip this.

Anyway, I want to leave you there.

So let's talk about our first scenario here, where let's say this curve, people didn't expect prices to change for my e book and now all of a sudden, people expect there's a change in expectation.

That's dynamic pricing.

Par value

Redemption

Present value

Present values

Future value

Dr. Price?

Wenneck, Price, Garner.

We found a couple of really interesting things.