Dynamic pricing involves:

Dynamic pricing is a strategy where prices are adjusted based on real-time supply and demand conditions in the market. This approach enables businesses to respond quickly to changes in consumer behavior, competitor pricing, and other market factors, allowing them to maximize revenue and remain competitive. For instance, airlines and ride-sharing services often employ dynamic pricing, increasing fares during peak demand hours while lowering them during times of less demand to attract customers.

The other options describe pricing strategies that do not align with the concept of dynamic pricing. Fixed pricing represents stable pricing without flexibility, eliminating competition through pricing suggests a more aggressive and potentially anti-competitive approach rather than market-responsive, and reducing prices across all products is a blanket strategy that lacks the responsiveness aspect integral to dynamic pricing. Thus, the correct understanding is that dynamic pricing inherently involves flexibility based on current market demands.