Abaara topic: Affine pricing

 

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Affine pricing

In economics, affine pricing is a situation where buying more than zero of a good gains a fixed benefit or cost, and each purchase after that gains a per-unit benefit or cost.

Where: T is the total price paid, q is the quantity in units purchased, p is a constant price per unit, k is the fixed cost,

the affine price is then calculated by T = p * q + k

In mathematical language, the price is an affine function (sometimes also linear function) of the quantity bought.

An example would be a cell phone contract where a base price is paid each month with a per-minute price for calls.


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Page topic: Affine pricing