Economics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (7th Edition)
7th Edition
ISBN: 9780134833392
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 16, Problem 16.3.4PA
To determine
Application of odd pricing.
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Exercise 6.3.Little Kona is a small coffee company considering entering a market dominated by Big Brewer. The benefits of each of them depend on whether or not the first enters and whether the second sets a high or low price:
After analazing the graph, answer the following question:
Great Brew threatens Little Kona by telling her, "If you go in, we're going to set a low price, so the best thing you can do is not get in." Do you think Little Kona should believe the threat? Why yes or why not?
4. Read the following article: Your Avocados and Olives Are Pricier Because Fat Is In Fashion.
a. In one to three sentences, briefly summarize the main point(s) of this article.
The increase and popularity of healthy fatty food like avocados, butter, olive oil, and salmon are making these products spike in price because of their popularity.
b. Draw two graphs side by side (like in problem 3 above) for an individual firm in a competitive market and the accompanying market. Draw them so they are in long run equilibrium initially.
c. In the article, it mentions that the producers of avocados, fish, and butter are struggling to increase output (quantity supplied). Why?
There was such a high rate of interest in these products in such a short amount of time, the companies weren’t able to fill the orders fast enough.
d. Draw the effect described in part d on your graph of the market in part c.
e. What happened to the equilibrium price as a result?
What does the article…
Briefly explain each of the following types of pricing strategy, and give an example of a good or service that is sold using that pricing strategy.
bundling
loss leading
Chapter 16 Solutions
Economics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (7th Edition)
Ch. 16 - Prob. 16.1.1RQCh. 16 - Prob. 16.1.2RQCh. 16 - Prob. 16.1.3PACh. 16 - Prob. 16.1.4PACh. 16 - Prob. 16.1.5PACh. 16 - Prob. 16.1.6PACh. 16 - Prob. 16.2.1RQCh. 16 - Prob. 16.2.2RQCh. 16 - Prob. 16.2.3RQCh. 16 - Prob. 16.2.4PA
Ch. 16 - Prob. 16.2.5PACh. 16 - Prob. 16.2.6PACh. 16 - Prob. 16.2.7PACh. 16 - Prob. 16.2.8PACh. 16 - Prob. 16.2.9PACh. 16 - Prob. 16.2.10PACh. 16 - Prob. 16.2.11PACh. 16 - Prob. 16.2.12PACh. 16 - Prob. 16.2.13PACh. 16 - Prob. 16.2.14PACh. 16 - Prob. 16.2.15PACh. 16 - Prob. 16.3.1RQCh. 16 - Prob. 16.3.2RQCh. 16 - Prob. 16.3.3RQCh. 16 - Prob. 16.3.4PACh. 16 - Prob. 16.3.5PACh. 16 - Prob. 16.3.6PACh. 16 - Prob. 16.3.7PACh. 16 - Prob. 16.3.8PACh. 16 - Prob. 16.3.9PACh. 16 - Prob. 16.3.10PACh. 16 - Prob. 16.3.11PACh. 16 - Prob. 16.3.12PACh. 16 - Prob. 16.2CTECh. 16 - Prob. 16.3CTE
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- Please read the following article from The Atlantic on the proliferation of price discrimination for online shopping https://goo.gl/EGFynW A.) The article notes that we are moving toward a situation in which perfect price discrimination is no longer “only a classroom thought experiment.” Suppose perfect price discrimination were to become a reality. What would this imply as far as consumer surplus, producer surplus, and market surplus in the market for online retail? B.) The article references a study showing that by using big data online firms are able to boost profits. When firms engage in price discrimination and experience an increase in profits, does this imply that consumers are made worse off as a result? Explain. C.) Do you agree with the author’s belief that the proliferation of price discrimination “makes suckers of us all”? Explain. D.) Do you consider the increased price discrimination in recent years as a net positive or a net negative to society? Explainarrow_forwardBriefly explain each of the following types of pricing strategy, and give an example of a good or service that is sold using that pricing strategy.  Block pricing.        Two-part pricing.              Multi-period pricing.       Loss leading.arrow_forwardBriefly summarize of pricing strategy of the Apple companyarrow_forward
- ECON: Industrial Organization Suppose two markets are identical except that in market A there is a monopoly seller who charges a single price, whereas in market B there is a monopoly seller who practices perfect price discrimination. In which market is the quantity traded higher? In which market is the total surplus higher? Briefly explain.arrow_forwardMany economists argue that rivalry in goods is not a real difference, but just a pricing problem. What do they mean? • If there are too few individuals in a non-rival good, then it can become rivalrous. The way to solve this is raise price and reduce the number of users.• If there are too many individuals in a non-rival good, then it can become rivalrous. The way to solve this is raise price and reduce the number of users.If there are too few individuals in a non-rival good, then it can become rivalrous. The way to solve this is raise price and raise the number of users.• If there are too many individuals in a non-rival good, then it can become rivalrous. The way to solve this is lower price and increase the number of users.arrow_forwardBriefly explain the first, second , and third degree price discriminationarrow_forward
- Questions Why does Google care whether people think it is large or small? Do highway billboards actually provide competition for Google? Briefly explain.arrow_forwardRead the following article: https://techcrunch.com/2021/02/12/will-ride-hailing-profits-ever-come/ then answer the following questions.                                                                           1. The article notes Uber had never been profitable, yet at the time Uber had a market cap above $90 billion. What gives?                                                                                     2. Uber lost approximately $7 billion in accounting profits in 2020. Is Uber’s producer surplus above or below this amount? Is Uber's economic profit above or below this amount? Explain.…arrow_forwardSuppose, you're going to open a new fast food business. Briefly discuss the factors that would possibly affect your fast food business's pricing decisions.arrow_forward
- Suppose in a small town called Utopia live 200 children and 300 adults. The only entertainment in the town is a theatre. The theatre has a fixed cost of 2000 dollars for preparing each play. However, once the play is ready, then selling an additional ticket has no cost at all. Demand for adult citizens and children are given in the following table What price would this theatre company charge for an adult ticket and for a child’s ticket? How much will it make?arrow_forwardWhat causes pricing to reach equilibrium? Give an instance.arrow_forwardAirlines charge a lower price to people who buy their tickets two weeks in advance than they do to people who buy their tickets two days in advance. Explain why. On the other hand, Broadway theaters charge a lower price to people who buy a ticket just before the show begins that to people who buy their tickets weeks in advance. Explain the difference.arrow_forward
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