Challenges that a price maker has to overcome for effective price discrimination .

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 11, Problem 1QR

To determine

Challenges that a price maker has to overcome for effective price discrimination.

Expert Solution & Answer

Explanation of Solution

Price discrimination is the practice of charging different prices for the same commodity from different consumers. In order to set effective price discrimination, the price maker has to overcome certain challenges.

First, the firm has to differentiate the group of consumers with different elasticities of demand. The firm will charge a higher price when the price elasticity is inelastic. This is because there will be a little responsiveness or the change in quantity demanded due to high change in price. If the price elasticity of demand is elastic, it means high responsiveness or if the change in quantity demanded is due to the small change in price, the firm will charge a relatively lower price.

Second, the firms that engaged in price discrimination should need the ability to prevent arbitrage. This means that the firms have to prevent the activities like resale of the commodity to restrict money creation for those who are buying the commodity at a lower price.

Economics Concept Introduction

Price discrimination: Price discrimination is the practice of charging different prices for the same commodity for different consumers.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

How to calculate total cost?

Problem 1-Experiments/Randomized Control TrialSuppose you are interested in studying the effect of being a part of the labor union on anindividual’s hourly wage.You collect data on 1000 people and run the following regression. where is a dummy variable which is equal t to 1 for people who are a part of labor union and0 for others. a. Suppose you estimate . Interpret b. Do you think is biased or unbiased? Explain. Now suppose you conduct a randomized control trial to answer the same question. Yourandomly assign some individuals to be a part of the labor union and others to not be a partof the labor union. The first step you take is to ensure that the randomization was donecorrectly. Then you estimate the following equation: =1 if the student is assigned to be a part of Labor Union=0 if the student is assigned to not be a part of Labor Union c. Why is it important to ensure that the randomization is done correctly? d. Name any two variables that you can use to test if Treatment and…

What is kiosk?

Answer 2

Question

Chapter 11, Problem 1QR

To determine

Challenges that a price maker has to overcome for effective price discrimination.

Expert Solution & Answer

Explanation of Solution

Price discrimination is the practice of charging different prices for the same commodity from different consumers. In order to set effective price discrimination, the price maker has to overcome certain challenges.

First, the firm has to differentiate the group of consumers with different elasticities of demand. The firm will charge a higher price when the price elasticity is inelastic. This is because there will be a little responsiveness or the change in quantity demanded due to high change in price. If the price elasticity of demand is elastic, it means high responsiveness or if the change in quantity demanded is due to the small change in price, the firm will charge a relatively lower price.

Second, the firms that engaged in price discrimination should need the ability to prevent arbitrage. This means that the firms have to prevent the activities like resale of the commodity to restrict money creation for those who are buying the commodity at a lower price.

Economics Concept Introduction

Price discrimination: Price discrimination is the practice of charging different prices for the same commodity for different consumers.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 11, Problem 1QR

To determine

Challenges that a price maker has to overcome for effective price discrimination.

Expert Solution & Answer

Explanation of Solution

Price discrimination is the practice of charging different prices for the same commodity from different consumers. In order to set effective price discrimination, the price maker has to overcome certain challenges.

First, the firm has to differentiate the group of consumers with different elasticities of demand. The firm will charge a higher price when the price elasticity is inelastic. This is because there will be a little responsiveness or the change in quantity demanded due to high change in price. If the price elasticity of demand is elastic, it means high responsiveness or if the change in quantity demanded is due to the small change in price, the firm will charge a relatively lower price.

Second, the firms that engaged in price discrimination should need the ability to prevent arbitrage. This means that the firms have to prevent the activities like resale of the commodity to restrict money creation for those who are buying the commodity at a lower price.

Economics Concept Introduction

Price discrimination: Price discrimination is the practice of charging different prices for the same commodity for different consumers.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 11, Problem 1QR

To determine

Challenges that a price maker has to overcome for effective price discrimination.

Expert Solution & Answer

Explanation of Solution

Price discrimination is the practice of charging different prices for the same commodity from different consumers. In order to set effective price discrimination, the price maker has to overcome certain challenges.

First, the firm has to differentiate the group of consumers with different elasticities of demand. The firm will charge a higher price when the price elasticity is inelastic. This is because there will be a little responsiveness or the change in quantity demanded due to high change in price. If the price elasticity of demand is elastic, it means high responsiveness or if the change in quantity demanded is due to the small change in price, the firm will charge a relatively lower price.

Second, the firms that engaged in price discrimination should need the ability to prevent arbitrage. This means that the firms have to prevent the activities like resale of the commodity to restrict money creation for those who are buying the commodity at a lower price.

Economics Concept Introduction

Price discrimination: Price discrimination is the practice of charging different prices for the same commodity for different consumers.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 11, Problem 1QR

To determine

Challenges that a price maker has to overcome for effective price discrimination.

Expert Solution & Answer

Explanation of Solution

Price discrimination is the practice of charging different prices for the same commodity from different consumers. In order to set effective price discrimination, the price maker has to overcome certain challenges.

First, the firm has to differentiate the group of consumers with different elasticities of demand. The firm will charge a higher price when the price elasticity is inelastic. This is because there will be a little responsiveness or the change in quantity demanded due to high change in price. If the price elasticity of demand is elastic, it means high responsiveness or if the change in quantity demanded is due to the small change in price, the firm will charge a relatively lower price.

Second, the firms that engaged in price discrimination should need the ability to prevent arbitrage. This means that the firms have to prevent the activities like resale of the commodity to restrict money creation for those who are buying the commodity at a lower price.

Economics Concept Introduction

Price discrimination: Price discrimination is the practice of charging different prices for the same commodity for different consumers.

Answer 6

Chapter 11, Problem 1QR

To determine

Challenges that a price maker has to overcome for effective price discrimination.

Expert Solution & Answer

Explanation of Solution

Price discrimination is the practice of charging different prices for the same commodity from different consumers. In order to set effective price discrimination, the price maker has to overcome certain challenges.

First, the firm has to differentiate the group of consumers with different elasticities of demand. The firm will charge a higher price when the price elasticity is inelastic. This is because there will be a little responsiveness or the change in quantity demanded due to high change in price. If the price elasticity of demand is elastic, it means high responsiveness or if the change in quantity demanded is due to the small change in price, the firm will charge a relatively lower price.

Second, the firms that engaged in price discrimination should need the ability to prevent arbitrage. This means that the firms have to prevent the activities like resale of the commodity to restrict money creation for those who are buying the commodity at a lower price.

Economics Concept Introduction

Price discrimination: Price discrimination is the practice of charging different prices for the same commodity for different consumers.

Answer 7

Chapter 11, Problem 1QR

To determine

Challenges that a price maker has to overcome for effective price discrimination.

Answer 8

Expert Solution & Answer

Explanation of Solution

Price discrimination is the practice of charging different prices for the same commodity from different consumers. In order to set effective price discrimination, the price maker has to overcome certain challenges.

First, the firm has to differentiate the group of consumers with different elasticities of demand. The firm will charge a higher price when the price elasticity is inelastic. This is because there will be a little responsiveness or the change in quantity demanded due to high change in price. If the price elasticity of demand is elastic, it means high responsiveness or if the change in quantity demanded is due to the small change in price, the firm will charge a relatively lower price.

Second, the firms that engaged in price discrimination should need the ability to prevent arbitrage. This means that the firms have to prevent the activities like resale of the commodity to restrict money creation for those who are buying the commodity at a lower price.