Final answer:
Yield Management is the approach used to adjust prices to accommodate capacity variability and prevent waste of perishable inventory, different from Fixed Pricing or Cost-Plus Pricing.
Step-by-step explanation:
Using dynamic pricing in response to capacity variability to ensure that perishable inventory is not wasted is known as Yield Management. This approach allows companies to maximize revenue by adjusting prices based on demand, timing, and other factors. Unlike Fixed Pricing, prices in Yield Management can fluctuate considerably. This method is distinct from Cost-Plus Pricing, which involves setting a price by adding a markup to the cost of producing the product. Market Pricing is more about setting a price in line with the competition, not changing it according to fluctuations in demand or capacity.
Modern economists, in a Keynesian spirit, recognize that prices do respond to the forces of supply and demand. However, there are costs associated with changing prices, known as menu costs, such as analyzing market demand, updating materials, and the potential customer dissatisfaction due to price changes. These considerations can make prices sticky, as frequent changes could use up company resources and alienate customers.