Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184241
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Chapter 19, Problem 3RQ
To determine
Rule of thumb.
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what are pricing tactics and examples? What are some forms of price discriminations?
Joe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse demand function is
p=140-2q,
where q is the number of rounds of golf that he plays per year. The manager of the Northlands Club negotiates
separately with each person who joins the club and can therefore charge individual prices. This manager has a good.
idea of what Joe's demand curve is and offers Joe a special deal, where Joe pays an annual membership fee and can
play as many rounds as he wants at $20, which is the marginal cost his round imposes on the Club.
Joe marries Susan, who is also an enthusiastic golfer. Susan wants to join the Northlands Club. The manager believes
that Susan's inverse demand curve is
p=120-2q.
The manager has a policy of offering each member of a married couple the same two-part prices, so he offers them both
a new deal. What two-part pricing deal maximizes the club's profit? Will this new pricing have a higher or lower access
fee than in Joe's original…
Explain how bundling is a strategy to deter entry to a market. Provide two examples
Chapter 19 Solutions
Microeconomics (9th Edition) (Pearson Series in Economics)
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- Why do firms have an incentive to price discriminate?arrow_forwardWhat is the difference between bundle pricing and random pricing?arrow_forwardWhich of the following definitions best describes price fixing? Price fixing occurs when a company promises to give another company a contract for goods or services. Price fixing occurs when firms charge a very high price for items that do not cost the firm very much to produce or supply. Price fixing occurs when a company charges very high prices in the beginning for a good or service, but gradually lowers the price over time. Price fixing occurs when businesses come together and agree on prices to charge consumers.arrow_forward
- What is the profit distributer machanism in Islami bank in pakistan?arrow_forwardUse the following roundtable summary on price discrimination from the DOJ and FTC – Roundtable on Price Discrimination - to answer the following questions. a.) What conditions must be met in order for price discrimination to be feasible? What are the factors that determine the competitive implications of price discrimination? b.) Summarize the difference between price discrimination used for “exploitative” purposes vs. “exclusionary” purposes. Explain which – and why – one form is legal but the other is not? c.) Do you think there should be greater government regulations or oversight of firms’ ability to engage in price discrimination? Explain.arrow_forwardAn increase in the demand of face shield raises the quantity of face shields demanded, but not the quantity supplied' Is the statement true or false?arrow_forward
- What is transfer pricing?arrow_forwardIn terms of reality, could you show that it is easier for a firm to practice second-degree price discrimination than it is for a firm to practice first-degree price discrimination? If you can use a graph, that would help me understand thank you.arrow_forward"Switching cost" is one of the ways to reduce buyer power. Please explain what switching cost exactly means.arrow_forward
- Explain how organizations can collude to raise prices of products like sugar using the concept of market forces.arrow_forwardAre they homothetic?arrow_forwardChapter 1: Problem 20 Annie McCoy, a student at Tech, plans to open a hot dog stand inside Tech's football stadium during home games. There are seven home games scheduled for the upcoming season. She must pay the Tech athletic department a vendor's fee of $3,000 for the season. Her stand and other equipment will cost her $4,500 for the season. She estimates that each hot dog she sells will cost her $0.35. © 2007 Wileyarrow_forward
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