5. CostCo is a retail outlet that requires members to pay an annual fee to access its stores. However, once this fee has been paid, customers can buy any number of goods at a relatively lower price per unit. This is an example of... (a) Perfect price discrimination (b) Segmentation (c) Bundling (d) Two-part pricing (e) Quantity discounts (f) Versioning

5. CostCo is a retail outlet that requires members to pay an annual fee to access its stores. However, once this fee has been paid, customers can buy any number of goods at a relatively lower price per unit. This is an example of... (a) Perfect price discrimination (b) Segmentation (c) Bundling (d) Two-part pricing (e) Quantity discounts (f) Versioning

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 1 Please explain briefly the key characteristics of the following concepts a) first-degree price discrimination b) second-degree price discrimination c) third-degree price discrimination
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8. A monopolist with cost function c(q) = q faces two consumers whose demand functions are given below. Q₁ = 100-P 50-P Q₂ (a) Suppose the monopolist is a uniform pricing firm (i.e.the monopolist can- not engage in any price discrimination). Find the firm's optimal pricing strategy. Calculate the firm's Lerner index. (b) What is the deadweight loss associated with this pricing strategy, if any? (c) Now, assume that price discrimination is possible. Find the monopolist's optimal second degree price-discrimination strategy. (d) Find the monopolist's optimal third degree price-discrimination strategy.
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5
1) You run a small company that provides regular pool service to customers in East Dallas. Like your competitors in the pool service business, you provide pool service 4 times per month but invoice customers for service on a monthly basis. When you raised the monthly price of pool service from $125 to $140, you lost 28 customers, leaving you with 90 pools to service. You believe that your demand curve has constant elasticity and has not shifted since you started your business. a. Estimate your elasticity of demand? b. Given the cost of pool chemicals, gas, wear and tear on your truck and your time, you believe that the marginal cost of servicing an additional pool in East Dallas is $75 per month. What can you say about your optimal price? Was it a good idea to increase your price? Over time, you realize that half of your 90 customers appear to be more price sensitive than the other half. You know that your customers communicate with each other and would be unhappy knowing that they are…
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