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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Give two examples of price discrimination. In each case, explain why the monopolist chooses to follow this business strategy.

To determine
The reason of price discrimination practice by monopoly firms.

Explanation

One example of price discrimination is publishing books, where the publishers will charge higher price for hardback books and lower price for paperback books. This is because the cost of production of hardback books is higher than the paperback books. Publishers implement this pricing strategy to cater the demand of two segments of customer groups. When the book is first released, the die-hard fans are likely to pay more for a hardback book; meanwhile, the ...

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