MyLab Economics with Pearson eText -- Access Card -- for Microeconomics
6th Edition
ISBN: 9780134125886
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 16, Problem 16.3.6PA
To determine
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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.
Block pricing.
Two-part pricing.
Multi-period pricing.
Loss leading.
2
Alex's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania.
Initially, Alex produced eight fire engines, but he has decided to increase production to
nine fire engines. The following graph shows the demand curve Alex faces. As you can
see, to sell the additional engine, Alex must lower his price from $75,000 to $50,000 pe
fire engine. Note that while Alex gains revenue from the additional engine he sells, he a
loses revenue from the initial eight engines because he sells them all at the lower price.
Use the purple rectangle (diamond symbols) to shade the area representing the revenu
lost from the initial eight engines by selling at $50,000 rather than $75,000. Then use t
green rectangle (triangle symbols) to shade the area representing the revenue gained
from selling an additional engine at $50,000.
PRICE (Thousands of dollars per fire engine)
250
200
175
150
125
100
25
Alex
1
O True
3
S
7
QUANTITY (Fire engines)
False
Demand
Revenue Lost
Revenue…
Chapter 16 Solutions
MyLab Economics with Pearson eText -- Access Card -- for Microeconomics
Ch. 16 - What is the law of one price? What is arbitrage?Ch. 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. 16.2.4RQ
Ch. 16 - Prob. 16.2.5RQCh. 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. 16.2.16PACh. 16 - Prob. 16.2.17PACh. 16 - Prob. 16.2.18PACh. 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. 16.3.12PA
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