Myeconlab With Pearson Etext -- Access Card -- For Microeconomics
9th Edition
ISBN: 9780134143071
Author: PINDYCK, Robert, Rubinfeld, Daniel
Publisher: PEARSON
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Chapter 11, Problem 5RQ
To determine
The third-degree
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Which of the following if true would make it harder for a firm to practice price discrimination?
Group of answer choices
There is a market where buyers can resell what they buy.
The firm knows about differences in demand across recognizable groups.
The firm has market power.
Suppose you are the owner of a movie theater. There are two types of customers: senior (‘s’) and non-senior (‘ns’). You know if a customer is a senior or non-senior and so you could use price discrimination with selection by indicators. The demand for movies is:
Senior: qs = 30 − 3ps
Non-Senior: qns = 15 − pns
1. Plot the total demand curve and the marginal revenue curve if the two types of consumers are as one.
2. Suppose that MC = 1 and that you can only set a single price.
2a. What is the optimal uniform price?
2b. What is the profit under uniform pricing?
2c. What is consumer surplus under uniform pricing?
In which cases would an organization benefit from using direct and indirect price discrimination? Does market structure influence the capacity of the firm to use price discrimination?
Chapter 11 Solutions
Myeconlab With Pearson Etext -- Access Card -- For Microeconomics
Ch. 11.A - Prob. 3ECh. 11 - Prob. 1RQCh. 11 - Prob. 2RQCh. 11 - Prob. 3RQCh. 11 - Prob. 4RQCh. 11 - Prob. 5RQCh. 11 - Prob. 6RQCh. 11 - Prob. 7RQCh. 11 - Prob. 8RQCh. 11 - Prob. 9RQ
Ch. 11 - Prob. 10RQCh. 11 - Prob. 11RQCh. 11 - Prob. 12RQCh. 11 - Prob. 13RQCh. 11 - Prob. 14RQCh. 11 - Prob. 15RQCh. 11 - Prob. 1ECh. 11 - Prob. 2ECh. 11 - Prob. 3ECh. 11 - Prob. 4ECh. 11 - Prob. 5ECh. 11 - Prob. 6ECh. 11 - Prob. 7ECh. 11 - Prob. 8ECh. 11 - Prob. 9ECh. 11 - Prob. 10ECh. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prob. 13ECh. 11 - Prob. 14ECh. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Prob. 17E
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- At the beginning of each academic year, Apple company would promote its products like MacBook Pro in universities’ stores by offering discounts to the university staff and students. Explain whether this is an example of price discrimination。arrow_forwardIs this a form of price discrimination? Why? Include in your analysis differing levels of elasticity, if relevant, and any other feature. Why would an airline use this practice? Provide a dollar and cents example. The airlines caught up with this scheme and ended it. What principal of price discrimination did the students violate so as to end it?arrow_forwardA firm practices third-degree price discrimination. With the aid of a graphical illustration, explain the firm’s pricing strategy to maximise profits.arrow_forward
- Why do firms practice second-degree price discrimination? a) charging a single price for every ticket is more profitable, but firms get pressure from their customers to offer group pricing- like the package prices for the concert. b) firms can earn greater profits practicing second-degree price discrimination compared to charging a single price per ticket.arrow_forwardThe figure to the right illustrates a restaurant's demand for early-bird meals (D,) and the demand for meals after 6 p.m. (D2) as well as each demand curve's corresponding marginal revenue curve. Assume the restaurant engages in price discrimination by charging different prices for early-bird meals and for meals after 6 p.m. 20.00- 18.00- 16.00- 14.00- 1.) Using the point drawing tool, indicate the profit-maximizing price and quantity for early-bird meals with price discrimination. Label this point "Early-bird." * 12.00- 10.00- 2.) Using the point drawing tool, indicate the profit-maximizing price and quantity for meals after 6 p.m. Label this point "Meals after 6." 8.00- Carefully follow the instructions above, and only draw the required objects. 6.00- 4.00- MC 2.00- MR. MR, D, D2 0.00- Ó 100 200 300 400 500 6ỏ0 700 800 9ó0 1000 Quantity Price and costarrow_forwardYou are the manager of a monopoly. Your analytics department estimates that a typical consumer’s inverse demand function for your firm’s product is P = 200 − 20Q, and your cost function is C(Q) = 80Q.a. Determine the optimal two-part pricing strategy. Per-unit fee: $ Fixed fee: $ b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price?arrow_forward
- a) Why does TRUVADA cost $1,780 in the United States whereas it's just $8 in Australia?b) Can you provide other examples of price discrimination?arrow_forwardSuppose you are the marketing manager for Fruit of the Loom. An individual's inverse demand for Fruit of the Loom women's underwear is estimated to be P = 25 − 3Q (in cents). If the cost to Fruit of the Loom to produce an item of women's underwear is C(Q) = 1 + 4Q (in cents), compute the price Fruit of the Loom should charge for a package of women's underwear. $108.50 $1.09 $1.02 $136.50arrow_forwardWhat of the following statements is not true about group price discrimination? Group of answer choices it is less difficult to charge different prices to different consumers if a good is an individually provided service, such as haircuts the group of consumers with more elastic demand (as a given price) will be charged a higher price in theory the good considered must be the same, but in the real world a price discriminating monopolist may need to change the good in order to charge different prices (e.g., put it into a different container or box). Which is the best example of price discrimination? Group of answer choices Higher price for a Ford truck than for a Ford car. Different price for a car wash on Tuesday versus Wednesday Average price of a 2000 square foot home in California being higher than in South Dakota.arrow_forward
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