Final answer:
Financial expediency determines charges based on cost and revenue considerations, examining both operational costs and expected income. It involves analyzing market competition, understanding menu costs, and considering customer responses, all framed within the context of supply and demand dynamics.
Step-by-step explanation:
Financial expediency is a method of setting charges based on cost and revenue considerations. This involves a detailed analysis of expenditures to run a business, projected earnings, and the relationship between these two elements. It requires balancing the costs of providing a service or product against the income expected to ensure financial viability and strategic planning for pricing. Financial expediency takes into account the dynamic nature of financial markets, where capital moves through electronic transfers and following laws of demand and supply, similar to other markets.
When firms evaluate their pricing strategies, they must contemplate 'menu costs', which are the costs they face when changing prices. This includes resources spent on analyzing market competition, updating marketing materials, and managing customer perceptions. Additionally, there is a macroeconomic consideration as prices across the economy do not adjust instantly but require time to align with the forces of supply and demand. Overall, financial expediency is a multi-faceted approach taking numerous factors into account to set financially strategic prices.