Economics (MindTap Course List)
Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 23, Problem 13QP
To determine

The reason for coupons that tend to be more common on small-ticket items than big-ticket items.

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Students have asked these similar questions
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.
What if a new restaurant entry increased consumer elasticity of demand for the sushi appetizer from 2 to 3?  The price you charge initially was $10.  By how much do you have to adjust the price?  Will you still be able to make a profit? Show/explain step by step.
Elasticity in the real world—sort of. The managers of a scholarly journal that I edit were thinking of raising the subscription prices. We used to charge individuals $32 for four issues per year and libraries $52 for the same. The managers proposed raising the prices to $45 and $75, respectively. My feeling was that these increases were too small, especially since the prices of substitutes (scholarly journals of a quality similar to ours) were much higher. I suggested that we charge $50 and $85, respectively. I believed that was more sensible, since the demand is quite inelastic over this price range, so with a larger price increase our total revenue would rise further. Apparently the managers agreed, and we raised our prices by the larger amount. Next year our revenue rose, suggesting that my guess about the elasticity of demand was correct. Why do you think the journal charges different prices to libraries?   Do individuals have a higher or lower elasticity of demand than libraries?…
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