Principles of Economics (Second Edition)
2nd Edition
ISBN: 9780393614077
Author: coppock, Lee; Mateer, Dirk
Publisher: W. W. Norton & Company
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Question
Chapter 11, Problem 1QFR
To determine
Challenges overcome for effective
Expert Solution & Answer
Explanation of Solution
Before a
- Different price elasticities of
demand : For executing price discrimination policy effectively the price maker firm must be able to enjoy some or high degree ofmonopoly power and the same time different consumers must face different price elasticities of demand. E.g. people having low level of income will be more price elastic and sensible to price change while the business class travelers possess moreinelastic demand . - Separate markets: - The price maker firm must overcome the challenge of identifying and separating the market segments and prevent resale of good. E.g. to stop an adult people from using a kid's movie ticket. Preventing business travelers from purchasing discounted ticket.
Economics Concept Introduction
Introduction:
Price discrimination is the process of imposing different prices from different groups of people for different quantity or quality for the same good or service. The best example of price discrimination exercise is imposing differentiated prices for business class, first class and economy class travels in a same flight. Price discrimination can be exercised only when the firm or seller becomes price maker i.e. one which has partial or complete control over market price and the industry as a whole.
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Chapter 11 Solutions
Principles of Economics (Second Edition)
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Similar questions
- why price discrimination is profitable in the perfume market or industry ?arrow_forwardWhat are the key conditions that must be present for a firm to successfully price discriminate? What are two different examples of price discrimination being practiced today?arrow_forwardWhere will you see more price discrimination: In monopoly-type markets with just a few firms or in competitive markets with many firms? Why?arrow_forward
- Why is price discrimination economically efficient for society as a whole but disadvantageous for buyers?arrow_forward• Provide an example of price discrimination from your own experience or from your work. Is this an example of first-degree, second-degree, or third degree price discrimination? • Describe the conditions that allow the firm to price discriminate in your example. • How does this practice affect the firm and its consumers?arrow_forwardusing relevant examples distinguish among the three forms of price discrimination.arrow_forward
- Explain the concept of black marketing as a direct consequence of price ceiling in economics?arrow_forwardWhat motivate an attraction to apply price discriminations? Will they succeed in applying price discrimination even though they are NOT a monopolist? Discuss your answer with a specific example of an attraction applying price discrimination in Malaysia.arrow_forward
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