f. Explain what would happen if all farms tried to cheat in
this way.
8. Consider each of the following examples in which a firm sells the
same product to different customers at different prices. Identify in
each case whether price discrimination is likely to be taking place.
If it is unlikely that price discrimination is occurring, what
explains the different prices?
a. Weekend airline fares that are less than weekday fares.
b. Business-class airline fares that are 150 percent higher
than economy-class fares. (Recognize that two business-
class seats take the same space inside the plane as three
economy-class seats.)
c. Discounts on furniture negotiated from the “suggested
retail price” for which sales personnel are authorized to
bargain and to get as much in each transaction as the
customer is prepared to pay.
d. Higher tuition for MBA students whose tuition is financed
by their employers.
9. Consider each of the following examples of price discrimination.
For each case, explain how the price discrimination works. Also
explain which consumers would be worse off and which
consumers would be better off if the firm were unable to price
discriminate in this way.
a. Seniors pay lower prices for theatre tickets than do other
adults.
b. Consumers pay less for paperback books than for
hardcover books, but must wait 6 to 12 months before the
rishikesh
(rishikesh)
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