In the Sunday newspaper, there are usually coupons that you can clip and take to the store to save money on products. Anyone can buy a newspaper, and the value of the coupons easily exceeds the price of the newspaper for most consumers
Is this an example of price discrimination? Explain.
Yes, it is. Consumers with more time are likely to have a more elastic demand for products, and thus they are willing to clip the coupons (and may not buy except at the lower price). Other consumers with less time won't deal with the coupons and thus will pay a higher price. This is essentially the same idea as movie matinee pricing.
You might also like to view...
For a natural monopoly, if price is set equal to marginal cost then the firm incurs an economic loss
Indicate whether the statement is true or false
Identify the correct statement with respect to consumption and saving function
a. Both the consumption function and the saving function have negative slopes. b. As disposable income declines, consumption and saving increase. c. The consumption function has a negative slope while the saving function has a positive slope. d. As disposable income rises, consumption and saving increases. e. The consumption function has a positive slope while the saving function has a negative slope.
In the classical model, fiscal policy has no demand-side effects on output or employment
a. True b. False
If the economy is self-regulating and in a recessionary gap, what happens?
A) Wages rise, the SRAS curve shifts leftward, and both Real GDP and the price level rise. B) Wages fall, the SRAS curve shifts leftward, the price level rises, and Real GDP falls. C) Wages fall, the SRAS curve shifts rightward, and both the price level and Real GDP fall. D) Wages fall, the SRAS curve shifts rightward, the price level falls, and Real GDP rises. E) none of the above