Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 13, Problem 4.2P
To determine
Patronizing the locals and its benefits.
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Article: BIZ Community. 2023. Innovative sustainability trends give South Africa's coffee industry a caffeine kick, 21 June 2023. [Online]. Available at: https://www.bizcommunity.com/Article/196/87/239424.html# [Accessed 23 January 2023].
Q.4.1 Defend the use of third-degree price discrimination by Tribeca Coffee when entering new markets.
Note: you are required to provide at least two (2) application points.
Q.4.2 Identify two (2) common errors in pricing that Tribeca Coffee could be potentially exposed to when entering Ethiopia and recommend ways for the business to minimise the impact of such errors.
Q.4.3 Tribeca Coffee has decided to invest in its own fleet of vehicles to move its product across the SADC region. Explain how the business can capitalise on opportunities and minimise the impact of challenges in transportation technology.
In terms of reality, could you show that it is easier for a firm to practice second-degree price discrimination than it is for a firm to practice first-degree price discrimination? If you can use a graph, that would help me understand thank you.
Hersheypark in Pennsylvania mentions the following offer on its Web page: “A military discount is available at Hersheypark during the regular summer operating schedule off of the Regular, Junior and Senior One Day admission. This discount is available to active duty military, reserves, retired military personnel, and members of the National Guard.” This is _____ price discrimination.
Chapter 13 Solutions
Principles of Economics (12th Edition)
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- Student pricing at the movie theater is a common example of third degree price discrimination. What is it about students, as compared to everyone else, that makes movie theaters want or need to charge them a lower price? Why is it important for movie theaters to make students show their IDs? Additionally, suppose a student could buy as many tickets as they wanted with their ID. How might that limit the theater’s ability to charge two drastically different prices for students and non-students?arrow_forwardSome pizza joints charge more for delivered pizza than if customers pick up the pizza at the restaurant. Explain how this might be an example of third-degree price discrimination and provide another explanation for this pricing difference other than price discrimination.arrow_forwardIdentify nine common pricing methods.arrow_forward
- Please read the following article from The Atlantic on the proliferation of price discrimination for online shopping https://goo.gl/EGFynW A.) The article notes that we are moving toward a situation in which perfect price discrimination is no longer “only a classroom thought experiment.” Suppose perfect price discrimination were to become a reality. What would this imply as far as consumer surplus, producer surplus, and market surplus in the market for online retail? B.) The article references a study showing that by using big data online firms are able to boost profits. When firms engage in price discrimination and experience an increase in profits, does this imply that consumers are made worse off as a result? Explain. C.) Do you agree with the author’s belief that the proliferation of price discrimination “makes suckers of us all”? Explain. D.) Do you consider the increased price discrimination in recent years as a net positive or a net negative to society? Explainarrow_forwardThe figure to the right illustrates a restaurant's demand for early-bird meals (D,) and the demand for meals after 6 p.m. (D2) as well as each demand curve's corresponding marginal revenue curve. Assume the restaurant engages in price discrimination by charging different prices for early-bird meals and for meals after 6 p.m. 20.00- 18.00- 16.00- 14.00- 1.) Using the point drawing tool, indicate the profit-maximizing price and quantity for early-bird meals with price discrimination. Label this point "Early-bird." * 12.00- 10.00- 2.) Using the point drawing tool, indicate the profit-maximizing price and quantity for meals after 6 p.m. Label this point "Meals after 6." 8.00- Carefully follow the instructions above, and only draw the required objects. 6.00- 4.00- MC 2.00- MR. MR, D, D2 0.00- Ó 100 200 300 400 500 6ỏ0 700 800 9ó0 1000 Quantity Price and costarrow_forwardThe figure to the right shows an industry composed of a single monopolistic domestic firm. Initially, the firm sells its output exclusively in the domestic market. According to this figure, the profit-maximizing output level is units and the price is $ Now suppose that this domestic monopolist begins to sell in foreign markets as well, where it faces a perfectly elastic demand at $6.00. In the figure, using the line drawing tool, draw the demand curve this firm faces in its foreign markets. Label this line DF- Carefully follow the instructions above and only draw the required object. Now that this firm is operating in two segmented markets, the firm produces units of output and is accused of dumping because: O A. more output (4 units) is sold in foreign markets than at home (2 units). O B. the foreign price of $6.00 is less than the domestic price of $8.00. 10.00- 9.00- 8.00- 7.00- 6.00- 5.00- 4.00- 3.00- 2.00- 1.00- 0.00- 0 Cost, C and Price, P 1 MRDOM MC DDOM 4 9 Quantities produced…arrow_forward
- Suppose now that Clomper's is able to perfectly price discriminate-that is, it knows each consumer's willingness to pay for a pair of Stompers and is able to charge each consumer precisely that amount. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing quantity sold and the lowest price at which the firm sells its boots. Next, use the purple points (diamond symbol) to shade the profit, the green points (triangle symbol) to shade the consumer surplus, and the black points (plus symbol) to shade the deadweight loss in this market with perfect price discrimination. (Note: If you decide that consumer surplus, profit, or deadweight loss equals zero, indicate this by leaving that element in its original position on the palette.) PRICE (Dollars per pair of Stompers) 100 90 80 70 60 50 40 30 20 10 0 D 80 160 ++ Monopoly Outcome Profit Consumer Surplus MC-ATC Demand 240 320 400 480 560 640 720 800 QUANTITY (Pairs of Stompers) Deadweight Loss ? Consider…arrow_forwardComplete the following table by matching each of the scenarios to the concept of resale price maintenance, predatory pricing, or bundling. Resale Price Maintenance Predatory Pricing Scenario Citron is a firm that manufactures electric scooters. Suppose Citron sells its electric scooters to online retailers for $830 each and requires those online retailers to charge at least $840 to shoppers for each electric scooter. Hynes sells a wide variety of condiments to retail grocery stores. Hynes recently developed two new condiments: a popular barbacuffalo and a much less popular green ketchup. Hynes requires grocery stores to order 10 bottles of the green ketchup for every 100 bottles of the barbacuffalo bought. Warm Winds is the only firm producing air fryers. It costs $430 to produce one air fryer, and Warm Winds sells each air fryer for $850. After Sirocco, a new firm with the same costs as Warm Winds, enters the market for air fryers, Warm Winds starts selling its air fryers for a price…arrow_forwardThe figure below illustrates the market for steel. If the steel market is competitive, firms can produce steel at a constant marginal cost of $100 per ton. Therefore, the price of steel is $100 per ton, and 100 tons are produced. Assume that if all the steel companies consolidate into a monopoly, the monopoly marginal cost will fall to $70 per ton. Use the straight line tool to draw the monopoly marginal revenue and marginal cost lines (extend the marginal cost line to 300 tons). Then use the plot point tool to plot the monopoly profit maximizing price and output on the demand curve. Part 2. If the market is competitive, total surplus is $ _________ Part 3. If the market is controlled by a monopoly, total surplus is $________arrow_forward
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