Why do some firms practice price discrimination? Relate your answer to the common practice of public colleges charging lower tuition to in-state students and higher tuition to out-of-state students
What will be an ideal response?
Price discrimination helps businesses capture more consumer surplus and hence increase their economic profit. Basically the firm charges more to people who are willing to pay more. For a public college, out-of-state students will likely have a higher willingness to pay for attending that college because, by leaving their home state, they are demonstrating that they truly want to attend the college. If the college charged in-state residents the same tuition as out-of-state residents, the college would miss the chance to maximize revenue from each group. Charging in-state residents the same high price as out-of-state residents would lead to a massive drop in quantity demanded and thus lower total revenue. By separating their customers based on differing demand conditions, the college earns more total revenue.
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Which of the following statements correctly indicates a property of good economic questions?
A) A good economic question addresses topics that are important to economic agents and/or to the society. B) A good economic question must always include arithmetic calculations and graphical solutions. C) A good economic question should always be positive and not normative. D) A good economic question should always be easy to answer.
The table above has information about the CPI, nominal wage rate, and nominal interest rate for the country of Syldavia for the years 2010 to 2012. The reference base year is 2010. The inflation rate in Syldavia from 2010 to 2011 was
A) 5.0 percent. B) -9.5 percent. C) 3.0 percent. D) 9.5 percent. E) -5.0 percent.
Most of the unemployment that occurred during the Great Depression was
A) frictional unemployment. B) structural unemployment. C) core unemployment. D) cyclical unemployment.
The estimate of potential GDP would decrease if
a. the rate of capital depreciation increased. b. the labor force decreased. c. the price level grew. d. All of the above would increase potential GDP.