EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 9780100605930
Author: Blinder
Publisher: YUZU
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Question
Chapter 11, Problem 7DQ
To determine
The reason for the betterment of consumers by charging a discriminatory price.
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why price discrimination is profitable in the perfume market or industry ?
Define price discrimination. Give two examples of price discrimination. How does perfect price discrimination affect consumer surplus, producer surplus and total surplus?
Explain price discrimination. What are the conditions to make price discrimination effective? Provide your answers with examples from the Airline Industry.
Chapter 11 Solutions
EBK ECONOMICS: PRINCIPLES AND POLICY
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- What is "third-degree price discrimination" and how is it applied in markets? A) Charging different prices based on the quantity purchased. B) Charging different prices to different consumer groups based on their elasticities of demand. C) Charging a uniform price to all consumers regardless of their willingness to pay. D) Offering discounts to consumers who purchase bundles of goods.arrow_forwardExplain with the aid of a diagram why perfect price discrimination is the same as an optimal two part tariff.arrow_forwarda) 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_forward
- Describe price discrimination. Give examples Explain the conditions which make price discrimination effective.arrow_forwardExplain how price discrimination increases profit.arrow_forwardWhich of the following is NOT an example of price discrimination? All of the above are examples of price discrimination. Firms in a perfectly competitive industry charging higher prices during periods of high demand. IBM and HP deliberately reducing performance of low-end products. A movie theater offering student discounts on movie tíckets.arrow_forward
- Is 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_forwardSome pizza joints charge more for delivered pizza than if customers pick up the pizza at the restaurant. Explain how this might be an example of third-degree price discrimination and provide another explanation for this pricing difference other than price discrimination.arrow_forwardWhen a firm is able to engage in perfect price discrimination, its marginal revenue curve O lies below its demand curve lies above its demand curve is the same as its demand curvearrow_forward
- Typically, retail prices for clothing and shoes of a particular brand and style are the same regardless of size. Yet larger sizes use more raw material in their production are thus more costly to produce. Why do you think this occurs? Are firms that these products at a single price regardless of size engaging in price discrimination?arrow_forwardIn terms of perfect first-degree price discrimination, could you show that the firm's price of the last unit sold would equal the marginal cost of producing that unit and that the firm would produce the perfectly competitive level of output? If you can use a graph, that would help me understand thank you.arrow_forwardExplain in details whether the underlined part of statement is true or false. In a perfectly competitive market, if consumers have different willingness to pay, price discrimination is a better strategy than non-price discrimination.arrow_forward
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