Sophisticated Pricing Strategies – End of Chapter ProblemMichelle owns an independent bookstore and has observed that college graduates read more than people without degrees. Sheis considering offering a 10% discount on book purchases to customers who have a postsecondary degree.Why might Michelle's plan hurt rather than help her business?People with higher education typically earn more than others and so may have a higher willingness to pay.High educational achievement is not a difficult-to-change characteristic.People who read more books are likely to have a higher willingness to pay than others.Whether an individual has a postsecondary degree is not easily verifiable.

Here Michelle is just trying to take some advantage of the situation by attracting them through…

Michelle owns an independent bookstore and has observed that college graduates read more than people without degrees. She is considering offering a 10% discount on book purchases to customers who have a postsecondary degree.

Michelle owns an independent bookstore and has observed that college graduates read more than people without degrees. She is considering offering a 10% discount on book purchases to customers who have a postsecondary degree.

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

Sophisticated Pricing Strategies – End of Chapter Problem
Michelle owns an independent bookstore and has observed that college graduates read more than people without degrees. She
is considering offering a 10% discount on book purchases to customers who have a postsecondary degree.
Why might Michelle's plan hurt rather than help her business?
People with higher education typically earn more than others and so may have a higher willingness to pay.
High educational achievement is not a difficult-to-change characteristic.
People who read more books are likely to have a higher willingness to pay than others.
Whether an individual has a postsecondary degree is not easily verifiable.

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