Why do some firms price discriminate? 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 grou
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An indirect tax is exemplified by
A) an income tax. B) a sales tax. C) a subsidy. D) None of the above answers is correct.
Using the data in the above table, the average total cost of producing 16 units per day is
A) $1.25. B) $6.25. C) $7.00 D) $7.50.
Under perfect price discrimination, consumer surplus
A) is less than zero. B) is greater than zero. C) equals zero. D) is maximized.
In the 1960s and 1970s the U.S. passed several major consumer safety laws, including the Flammable Fabrics Act and the Child Protection Act. The economic impact of such legislation may include all of the following except:
a. reducing the price of the regulated product. b. increasing the cost of producing the regulated product. c. reducing the supply of the regulated product. d. reducing competition within the regulated industry.