chapter 17
Which criteria for market segmentation would be easiest to use for an online retailer?
Account address
Corinne gives private art lessons to children. She wants to price discriminate based on the household income of her students. She does not know the exact household income of her students but wants to estimate it, to put them into different price segments. What easily verifiable measure of income could she use?
Public or private school attendance
Hassan is a student who received a coupon to buy pizza from Pizza House at $4 off the regular price. Students at Hassan's school seem to receive the coupons frequently. Which of the following is an assumption that the owners of Pizza House are making about the students at Hassan's school?
They are price-sensitive
Price discrimination leads to __________ than a one-price system
a more efficient output
Which of the following is an example of a company practicing price discrimination?
Most passengers traveling on an airplane pay different prices for their tickets
Which of the following is NOT an example of the hurdle method of price discrimination?
Segmenting the market into identifiable groups with different prices
When price discriminating, a company owner should set price ________ for each customer
at or just below the marginal benefit
When a company practices price discrimination, it will keep adding customers until the point where the
company's marginal cost equals the last customer's marginal benefit
Consumer backlash against price discrimination often focuses on the issue of
fairness
A furniture store owner allows its salespersons to lower the price by up to ten percent to gain a sale if the buyer appears price sensitive. The owner also instructs salespersons to confer with management about the possibility of higher discounts if needed to make a sale. This example of individually negotiated prices is a form of price discrimination known as
haggling
A certain shampoo is on sale twice a year, every year. This is an example of a seller using ________ as a form of ________ to achieve price discrimination
price fluctuation; the hurdle method
Bayside Shoe Shop offers a BOGO (buy one, get one) special where customers can buy a pair at a full price and get another pair at half-price. This form of price discrimination is referred to as
quantity discount
A price-discriminating company can attract more customers by __________ price, as long as _________.
reducing; the price is above its marginal cost
Selling alternative versions of a product at different prices is a way to identify the __________ of customers and charge them different prices
reservation price
When a seller offers lower prices to those buyers who are willing to overcome some obstacles to get it, the seller is using __________ to get buyers to reveal their __________.
the hurdle method; reservation price
Price discrimination can be successful only if
the product cannot be resold
Marta owns a food truck. Which of the following would limit Marta's ability to price discriminate?
Marta has little understanding of how much each customer values her product
A useful rule of thumb is that the higher the marginal benefit a consumer gains from a product, the
higher the buyers' reservation price will be
What factors determines how many segments to divide your demand in for group pricing?
The amount of consumer information available to the company
Sun Do sells key chains with leather fobs for $12 and $9. The key chains are very similar and have identical manufacturing costs. The difference is that the stitching on the leather fob is in less precise pattern on the $9 key chain than it is on the $12 key chains. What approach to price discrimination is Sun Do using?
Offering imperfect goods as part of the hurdle method