Please read the following article from The Atlantic on the proliferation of
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
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? Explain
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- 6. Examples of price discrimination Complete the following table by indicating whether or not each scenario is an example of price discrimination. Hint: To determine whether a scenario is an example of price discrimination, think about whether the market can be segmented into two groups that pay different prices for the same good. Price Discrimination No Scenario Yes Last-minute "rush" tickets can be purchased for most Broadway theater shows at a discounted price. They are typically distributed via lottery or on a first-come, first-served basis a few hours before the show. Assume that the theater in question does not hold seats in reserve for this purpose, but rather offers rush tickets only for seats not sold before the day of the performance. A local boutique is having a sale on sweaters, but customers are not aware of the sale until they are already in the store. In other words, there is no advertising of the sale other than signs in the back of the store that cannot be seen from…arrow_forwardDo not use chatgpt.arrow_forwardDeBeers has a monopoly on the production of diamonds. Use the following graph showing the demand, MR and cost curves of DeBeers to answer the questions below. How many carats of diamonds does DeBeers produce to maximize its annual profit? What price does it charge? How much annual profit does it make? If DeBeers was producing at the allocatively efficient level of output, how many carats of diamonds would it produce? What price would it charge? Suppose that the government decided to regulate DeBeers monopoly and imposes a price ceiling of $50 per carat of diamonds. How many carats of diamonds would DeBeers produce? What price would it charge? What profit would it make?arrow_forward
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