Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 14, Problem 2MC
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Which of the following is not a requirement for a successful price discrimination strategy?
A. A firm must have market power
B. The firm must be able to prevent consumers who buy a product at a low price from reselling it to other consumers at a high price.
C. Some consumers must have greater willingness to pay for the product than other consumers, and the firm must be able to know what prices consumers are willing to pay
D. The good must be a very expensive good
Which of the following is NOT a condition necessary for price discrimination?
a.The product cannot be resold to another customer.
b. the product must be a durable good
c. the seller must have some market power
d. The price elasticities of demand are different for each group of consumers.
1. Which of the following statements regarding price discrimination is false?
In order to capture more surplus, the firm must have some market power.
The firm must have some information about the different amounts people will
pay for the product.
The firm must be able to prevent resale.
The firm must be able accurately forecast total sales.
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Managerial Economics: A Problem Solving Approach
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- You work for the only car rental company at an airport renting identical mid-size cars. They want to implement a price discrimination strategy. What price discrimination strategy would you recommend? The goal here is to get to you to think about the three things below. Focus your answer on them. You don't need to do any additional research. (1) Does your company have market power? (2) What are your market segments? (3) What information do you need?arrow_forward(a) Which degree of price discrimination may cause favor for the consumer rather than producer? Explain it with the help of most appropriate example.arrow_forwardThe following are the necessary conditions which must be fulfilled for the implementation of price discrimination except for ______ a. there should be no arbitrage b. the market must be divided into sub-markets with different elasticities of demand c. the good or service in question should not be resaleable d. the market must be divided into sub-markets with different elasticities of supplyarrow_forward
- Lesson 5.10 - Price Discrimination is a price structure in which the seller charges different prices for the product it sells and the price differences do not reflect cost differences. 2. There are three types of price discrimination. price discrimination is a price structure in which the seller charges the highest price that each consumer is willing to pay for the product rather than go without it. price discrimination is a price structure in which the seller charges a uniform price per unit for one specific quantity, a lower price for an additional quantity, and so price discrimination is a price structure in which the seller charges different prices in different markets or charges different prices to various segments of the buying population. 3. Before a seller can price discriminate, certain conditions must be in place: on. a. The seller must be a price b. The seller must be able to 1. c. The possibility for higher price, cannot exist. prices. among customers who are willing to pay…arrow_forwardWhich of the following is NOT an example of the hurdle method of price discrimination? O Bundling to get a second good at a lower price. O Offering different versions of a product that sell for different prices. O Segmenting the market into identifiable groups with different prices. O Making customers put extra effort to get a lower price on a product.arrow_forwardSuppose you can separate consumers into two groups: Group 1 has a price elasticity of demand = -4 and group 2 has a price elasticity of demand of -6. If you could conduct third degree price discrimination, which group would you charge a higher price to? Why? Suppose the the profit maximizing price for group 2 is $36. What price should I charge group 1? Show all your work.arrow_forward
- what are pricing tactics and examples? What are some forms of price discriminations?arrow_forwardEconomics You own a popular company and only sell 1 product. You plan to incorporate price discrimination. Your research shows a lot of people would buy at $2000. a lot more people would buy the product at $500, but not at $2000. Your marginal cost per unit is $100. To maximize profit, you decide to set the price at $2000 and buy billboards across your market advertising a weekly sale: the price will be $500 on Tues, Wed, and Thurs from 12pm to close. a) Is this likely to achieve a goal of perfect price discrimination? Why or why not? b) Can you suggest any better way of executing your optimal pricing strategy?arrow_forwardPrice discrimination leads to higher price for all consumer . True or falsearrow_forward
- (1) what is an example of price discrimination that you have experienced ? is this price diesccrimination beneficial to consumers ? why yes or why no?arrow_forwardWhy are changes of prices of commodities is very responsive to the needs of the consumer? Is price discrimination considered as fair business practice. Why do companies tends to sell commodity to different buyers at different prices?arrow_forwarda. Complete the table below picture attached. b. What conditions should exist for price discriminationarrow_forward
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