You own a local sub shop in a college town. You primarily serve two groups of people: local residents (both students and other local residents) and visitors to your town. Devise a price discrimination strategy that will increase your revenues compared to a single-pricing strategy.
What will be an ideal response?
People who live in town know all of the local restaurants well and have kitchens where they could cook their own meals. This means that they will have a relatively more elastic demand for your subs than visitors do. You could engage in price discrimination in a number of ways: by mailing coupons to local residents; by giving out cards so that they can get a meal free if they get enough punches on the card; or by participating in programs through which members of local banks and credit unions get discount cards that are honored in your restaurant. Others may propose student discounts because college students have a higher price elasticity due to university food services and food being a higher percentage of a student's budget compared to people working full time.
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Under Alan Greenspan, the Fed strived to hit its goals of price stability and high employment through
A) setting targets for rates of growth in the M1 and M2 money supplies. B) practicing discretionary monetary policy, reacting to counter-changes in the level of unemployment during recessions and booms. C) setting targets for the federal funds rate of interest. D) strict adherence to rules based strategies.
Which of the following is the most likely cause of most recessions according to the Keynesian model?
a. a fall in productivity. b. an increase in taxation and government spending. c. a fall in expected profits. d. a rise in the price of oil. e. a fall in the money supply.
We cannot predict the effect on the equilibrium quantity, but know that the market clearing price will increase when
A. supply decreases and at the same time demand increases. B. supply and demand decreases simultaneously. C. supply and demand increases simultaneously. D. supply increases and demand increases simultaneously.
According to traditional Keynesian economics, contractionary fiscal policy initiated by the federal government
A. is an appropriate way to slow down an over-heated economy. B. is an appropriate way to prevent recessions and depressions. C. will always fail due to crowding out effects. D. is never appropriate.