Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 10, Problem 8QP
To determine
The differences and similarities between
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Amazon Discrimination
In September 2000, Amazon offered a Planet of the Apes DVD to customers using a Netscape Web browser for $64.99. Several seconds later, however, a similar search performed with Microsoft’s Internet Explorer browser resulted in a price of $74.99 for the same product. Why?
Price Discrimination
Describe a price discrimination opportunity your company faces—direct, indirect, or bundling. Tell your company how best to implement the scheme, and compute the profit consequences of implementing the scheme.
Which of the following if true would make it harder for a firm to practice price discrimination?
Group of answer choices
There is a market where buyers can resell what they buy.
The firm knows about differences in demand across recognizable groups.
The firm has market power.
The dilemma of price discrimination is that, for example in the case of ticket scalping, it transfers
consumer surplus into producer surplus."
Is it in society's best interest to allow the scalping of tickets? Explain.
Why do the original ticket sellers refuse to price discriminate like the scalpers? Explain.
Chapter 10 Solutions
Microeconomics
Ch. 10.1 - Prob. 1STCh. 10.1 - Prob. 2STCh. 10.1 - Prob. 3STCh. 10.3 - Prob. 1STCh. 10.3 - Prob. 2STCh. 10.3 - Prob. 3STCh. 10.3 - Prob. 4STCh. 10.5 - Prob. 1STCh. 10.5 - Prob. 2STCh. 10.5 - Prob. 3ST
Ch. 10 - Prob. 1QPCh. 10 - Prob. 2QPCh. 10 - Prob. 3QPCh. 10 - Is there a deadweight loss if a firm produces the...Ch. 10 - Prob. 5QPCh. 10 - Prob. 6QPCh. 10 - Prob. 7QPCh. 10 - Prob. 8QPCh. 10 - Prob. 9QPCh. 10 - Prob. 10QPCh. 10 - Prob. 11QPCh. 10 - Prob. 12QPCh. 10 - Prob. 13QPCh. 10 - Prob. 14QPCh. 10 - Prob. 1WNGCh. 10 - Prob. 2WNGCh. 10 - Prob. 3WNGCh. 10 - Prob. 4WNGCh. 10 - Prob. 5WNGCh. 10 - Prob. 6WNG
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- What of the following statements is not true about group price discrimination? Group of answer choices it is less difficult to charge different prices to different consumers if a good is an individually provided service, such as haircuts the group of consumers with more elastic demand (as a given price) will be charged a higher price in theory the good considered must be the same, but in the real world a price discriminating monopolist may need to change the good in order to charge different prices (e.g., put it into a different container or box). Which is the best example of price discrimination? Group of answer choices Higher price for a Ford truck than for a Ford car. Different price for a car wash on Tuesday versus Wednesday Average price of a 2000 square foot home in California being higher than in South Dakota.arrow_forwardSuppose you are the owner of a movie theater. There are two types of customers: senior (‘s’) and non-senior (‘ns’). You know if a customer is a senior or non-senior and so you could use price discrimination with selection by indicators. The demand for movies is: Senior: qs = 30 − 3ps Non-Senior: qns = 15 − pns 1. Plot the total demand curve and the marginal revenue curve if the two types of consumers are as one. 2. Suppose that MC = 1 and that you can only set a single price. 2a. What is the optimal uniform price? 2b. What is the profit under uniform pricing? 2c. What is consumer surplus under uniform pricing?arrow_forwardRecently I received an e-mail which stated the following. “We'd like to offer you a special discount on your next purchase. Click here to visit shop.mlb.com and you'll automatically receive 15% OFF your purchase at checkout.” This offer is an example of a price _____ engaging in _____ price discrimination. Select one: A. taker; second-degree B. maker; first-degree C. maker; second-degree D. taker; third-degree E. taker; first-degree F. maker; third-degreearrow_forward
- Perfect price discrimination is characterized by charging different prices to customers based on when they purchase the good or service. prices that are different from competitors' prices. customers a different price, depending on their gender. each customer a price equal to his or her maximum willingness to pay. customers a different price, depending on their income. 46°F aarrow_forwardSuppose you are the marketing manager for Fruit of the Loom. An individual's inverse demand for Fruit of the Loom women's underwear is estimated to be P = 25 − 3Q (in cents). If the cost to Fruit of the Loom to produce an item of women's underwear is C(Q) = 1 + 4Q (in cents), compute the price Fruit of the Loom should charge for a package of women's underwear. $108.50 $1.09 $1.02 $136.50arrow_forwardLesson 5.10 - Price Discrimination is a price structure in which the seller charges different prices for the product it sells and the price differences do not reflect cost differences. 2. There are three types of price discrimination. price discrimination is a price structure in which the seller charges the highest price that each consumer is willing to pay for the product rather than go without it. price discrimination is a price structure in which the seller charges a uniform price per unit for one specific quantity, a lower price for an additional quantity, and so price discrimination is a price structure in which the seller charges different prices in different markets or charges different prices to various segments of the buying population. 3. Before a seller can price discriminate, certain conditions must be in place: on. a. The seller must be a price b. The seller must be able to 1. c. The possibility for higher price, cannot exist. prices. among customers who are willing to pay…arrow_forward
- Marissa is on vacation in Mexico and buys a bottle of vanilla paste for about half the price she would pay for the same bottle at home. The vanila paste isn't on sale in Mexico but is priced lower because that's the price the market will bear What is this an example of? Multiple Choice price somming premium pricing price discrimination price fixing predatory prongarrow_forwardQUESTION 16 If the price of ground beef decreases, which of the following will occur? The demand curve for ground beef will shift to the left. The substitution effect will cause some consumers to switch to other types of meat. Consumers will experience a decrease in their purchasing power. There will be a movement down the demand curve for ground beef. QUESTION 17 Price discrimination is defined as: selling a product at the same price to each and every consumer selling a product at more than one price selling a product at its marginal cost plus a markup selling more than one version of a product producing goods and services for sale within the firm QUESTION 18 The demand function for Super Big Bright LED light bulbs is Qd = (45 million) - (3.5 million × P). If the company charged a price of $8 per bulb, how many will be demanded? 41.5 million 37 million 17 million 10 million QUESTION 19 If Goods X and Y are substitutes, if the price of Good X increases, this will cause a movement…arrow_forwardA firm practices third-degree price discrimination. With the aid of a graphical illustration, explain the firm’s pricing strategy to maximise profits.arrow_forward
- Airlines charge a lower price to people who buy their tickets two weeks in advance than they do to people who buy their tickets two days in advance. Explain why. On the other hand, Broadway theaters charge a lower price to people who buy a ticket just before the show begins that to people who buy their tickets weeks in advance. Explain the difference.arrow_forwardThe widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $20, $12, $8, $4, and $2 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $8, $12, $20, $32, and $44 (one buyer at each price). For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied. Price Quantity Demanded Quantity Supplied ($ per widget) (widgets) (widgets) $2 $4 $8 $12 $20 $32 $44 In this market, the equilibrium price will be______ per widget, and the equilibrium quantity will be ___ (#) widgets.arrow_forwardSuppose that The University of Memesland (UM) and Memesland University of Technology (MUT) are the only two universities in Australia that provide online courses to students. Recently they have faced new, international competition, such as the American low- cost university, Horvord. Horvord specialises in providing online courses at a discount to students if they purchase many courses with Horvord. Select the item from the list provided to make the following statements true. When compared to UM and MUT, Horvord could be argued to be engaging in discrimination. price Before Horvord existed, UM and MUT existed in a state of strategic competition, and they both chose dominant strategies that resulted in significant losses for both of them. They were likely facing a If UM decides to offer courses at a discounted price to people under 25 years old, this could be described as price discrimination. 1. first degree 2. second degree 3. peak load pricing 4. pricing power 5. arbitrage 6.…arrow_forward
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