6. Examples of price discrimination Complete the following table by determining whether or not each scenario is an example of price discrimination. Hint: To determine whether a scenario is an example of price discrimination, think about whether the market can be segmented into two groups that pay different prices for the same good. Scenario Last-minute "rush" tickets can be purchased for most Broadway theater shows at a discounted price. They are typically distributed via lottery or on a first-come, first-served basis a few hours before the show. Assume that the theater in question does not hold seats in reserve for this purpose, but rather offers rush tickets only for seats not sold before the day of the performance. Horizon Wireless offers various features "à la carte" that a customer may add to his or her calling plan, such as a text messaging package, a data package, and an Internet package. Price Discrimination Yes O No O

6. Examples of price discrimination Complete the following table by determining whether or not each scenario is an example of price discrimination. Hint: To determine whether a scenario is an example of price discrimination, think about whether the market can be segmented into two groups that pay different prices for the same good. Scenario Last-minute "rush" tickets can be purchased for most Broadway theater shows at a discounted price. They are typically distributed via lottery or on a first-come, first-served basis a few hours before the show. Assume that the theater in question does not hold seats in reserve for this purpose, but rather offers rush tickets only for seats not sold before the day of the performance. Horizon Wireless offers various features "à la carte" that a customer may add to his or her calling plan, such as a text messaging package, a data package, and an Internet package. Price Discrimination Yes O No O

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. Price-discriminating monopolist Edison owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on his property, making a large crater. The event attracts scientists and tourists, and Edison decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show daily demand (D) curves and marginal revenue (MR) curves for the two markets. Edison's marginal cost of providing admission tickets is zero. PRICE (Dollars per ticket) 20 18 16 14 12 10 8 6 4 2 0 0 3 Market A Slope: -0.67 MR 6 9 12 15 18 21 24 QUANTITY (Admission tickets) D 27 30 ? PRICE (Dollars per ticket) 20 18 16 14 12 10 8 6 4 2 0 0 3 Market B Slope: -0.67 MRB BO 6 9 12 15 18 21 24 27 QUANTITY (Admission tickets) 30 (?)
I pretty sure I got the first part right. I am struggling with bottom parts.
why do you think brand-named goods are more elastic or less elastic than categories, especially when there are very good substitutes for Exxon gasoline available at close distances?
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PRICE (Dollars per room) 500 450 400 350 300 250 200 150 100 50 0 Demand 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) Graph Input Tool Market for Triple Sevens's Hotel Rooms Price (Dollars per room) Quantity Demanded (Hotel rooms per night) Demand Factors Average Income (Thousands of dollars) Airfare from LAX to LAS (Dollars per roundtrip) Room Rate at Exhilaration (Dollars per night) 350 150 50 250 200 For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Triple Sevens is charging $350 per room per night. If average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Triple Sevens rooms per night. Therefore, the income elasticity of demand is from rooms per night to , meaning that hotel rooms at the Triple Sevens are If the price of an airline ticket from LAX to LAS were to increase by 20%, from $250 to $300 roundtrip, while all other demand factors…
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The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $26, $14, $10, $5, and $3 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $10, $14, $26, $34, and $42 (one buyer at each price). For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied. Price Quantity Demanded Quantity Supplied ($ per widget) (widgets) (widgets) $3 $5 $10 $14 $26 $34 $42 In this market, the equilibrium price will be per widget, and the equilibrium quantity will be widgets.
Exercises for Chapter 7 1. Recall exercise 1 from Chapter 5 in which an increase in the toll on a highway from $.40 to $.50 would reduce use of the highway by 5,000 cars per week. Because of the reduced use of the highway, demand in the secondary market for subway rides increases. Assuming that the price of subway rides is set equal to the marginal cost of operating the subway and marginal costs are constant (i.c., the supply schedule is horizontal), and no externalities result from the reduced use of the highway and the increased use of the subway, are there additional costs or benefits due to the inereased demand for subway rides? Why or why not? a. Because of the reduced use of the highway, demand in the secondary market for gasoline falls by 20,000 gallons per year. There is a stiff tax on gasoline, one that existed prior to the new toll. Assuming that the marginal cost of producing gasoline is $1 per gallon, that these marginal costs are constant (i.c., the supply schedule is…
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QUESTION 1 Firms A, B, and C were all selling 1,000 cups of coffee per day at $3.50 per cup, but in the following week they all changed their prices. This gave their managers some information about the elasticity of demand in their local market, though they have to be careful to recognize that other factors might also have affected demand. The table below shows the change in sales as a result of their new prices; they made no other changes. Complete the table by calculating the revenue, cost of goods sold (COGS), and gross margin for each firm. Firm Baseline A B C Price per Cup $3.50 $3.00 $4.00 $2.50 Cups Sold 1,000 1,140 830 1,500 Revenue $3,500 $0 0 0 COGS @ $0.35 per Cup $350 $0 $0 $0 Gross Margin $3,150 $0 $0 $0 Coffee prices are going up, and Firm B is trying to decide whether to pass on to customers a cost increase of 10¢ per cup-to $0.45 per cup. What will be their new gross margin if they don't pass on the cost increase and demand remains unchanged? $ 0 What will be their new…
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5. Price-discriminating monopolist Edison owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on his property, making a large crater. The event attracts scientists and tourists, and Edison decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show daily demand (D) curves and marginal revenue (MR) curves for the two markets. Edison's marginal cost of providing admission tickets is zero. (? Market A Market B 20 20 18 18 16 16 14 14 Slope: -0.67 12 12 10 10 Slope: -0.67 8 8 4 4 2 2 MR, MRB PB( + 3 9 12 15 18 21 24 27 30 3 12 15 18 21 24 27 30 QUANTITY (Admission tickets) QUANTITY (Admission tickets) PRICE (Dollars per ticket) PRICE (Dolla per ticket)