Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Question
Chapter 16, Problem 16.2.14PA
Subpart (a):
To determine
Increasing profit by
Subpart (b):
To determine
Increasing profit by price discrimination.
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Check out a sample textbook solutionStudents have asked these similar questions
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.
A dry cleaner has a sign in its window: “Free Internet Coupons.” The dry cleaner lists its Web site, and indeed there are good discounts available with the coupons. Most customers don’t use the coupons.
What probably would be the main difference between customers who use the coupons and those who don’t?
Some people might think “The dry cleaner offers the coupons to get people in the door to try the place out, but then the customers will pay the normal high price afterward.” But the coupons are always there, so even repeat customers can keep using the coupons. Is this a mistake on the business owner’s part? (Hint: Think about marginal cost.)
Del's and Rodney's are two plumbing services in a gentrifying area of South East
London. Within the area they service, the two firms operate as a duopoly and
together serve one hundred percent of the available local market. One of their key
lines of business is visiting customer's homes to install a new shower rail. A student
project has been investigating the local plumbing business and has estimated the
following information for Del's and Rodney's:
Total demand for new shower rails per week is given by
P = 200 - 4Q
Where Q is total market demand and can be divided between Del's (qd) and
Rodney's (qr) such that
Q = qd + qr
Assuming that the marginal cost of serving an extra customer is £40 for each, and
that marginal revenue for Del is given by
MRd
2008qd - 4qr
And marginal revenue for Rodney is given by
MRr
Then
2008qr - 4qd
8
CONTINUED
Chapter 16 Solutions
Microeconomics (7th Edition)
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 - In 2017, the Rock and Roll Hall of Fame and Museum...Ch. 16 - Prob. 16.2.3RQCh. 16 - Prob. 16.2.4PA
Ch. 16 - Lexmark charges lower prices for its printer...Ch. 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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- What is the reason that Wholesalers are the most misunderstood of marketing intermediaries?arrow_forwardDeborah sells bottled water from a small stand by the beach. On the last day of summer vacation, many people are on the beach, and Deborah realizes that she can make a lot more money this day if she hires someone to walk up and down the beach selling water. She finds a college student named Carlos and makes him the following offer: They'll each sell water all day and split their earnings (revenue minus the cost of water) equally at the end of the day. Deborah knows that if they both work hard, Carlos will earn $90 on the beach and Deborah will earn $180 at her stand, so they will each take home half of their total revenue: = $135. If Carlos shirks, he'll generate only $50 in earnings. Deborah does not know that Carlos estimates his personal cost (or disutility) of working hard as opposed to shirking at $25. $90+$180 Once out of Deborah's sight, Carlos faces a dilemma: work hard (put in full effort) or shirk (put in low effort). In terms of Carlos's total utility, it is better for him…arrow_forwardList and explain the three kinds of pricing methods. Give an advantage and a disadvantage for each method.arrow_forward
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