Final answer:
Even pricing, such as $60 for a Polo shirt, suggests a higher quality image compared to odd pricing, which implies savings or value. The use of either pricing strategy can influence consumers' perceptions and their decision-making based on the marginal utility they receive from a product relative to its price.
Step-by-step explanation:
The decision of Macy's to use even prices such as $60 for a Ralph Lauren Polo shirt is an application of odd-even pricing, and even prices are often used to signal higher quality or luxury status to consumers. In contrast, odd pricing, such as $59.99, tends to be associated with bargains or discounts. The effectiveness of this pricing strategy can depend on the consumer's perception and the product's position in the market.
In a micro-level example, if a company like Coolshirts sells t-shirts at a price of $9 each, they may be using odd pricing to convey a sense of value. However, in cases where a premium or high-value perception is desired, they might opt for even pricing. Behavioral economists suggest that consumers do not always act rationally and are influenced by the reference price and the way they perceive savings as percentages rather than absolute figures.
To maximize utility, a consumer such as José in our example would need to assess the marginal utility of products like T-shirts relative to their price compared to other goods, such as movies. If T-shirts offer less marginal utility per dollar, it would be wise for him to adjust his spending accordingly to gain more overall satisfaction.