Micro Chapter 11

An outlet mall tends to be more attractive to shoppers who have

elastic demand.

what is perfect price discrimination?

If an individual could charge a different price to each consumer

A firm can be identified as practicing price discrimination when

producers set different prices for distinct groups of consumers, despite selling identical products to each group.

In the past, the University of Georgia (UGA) sold enrolled students a pack of paper tickets that granted them discounted access to all home football games. Recently, the university changed its policy to the following: "Student tickets will be inscribed on your valid UGA ID. There will be no physical tickets for home games." This rule change was most likely implemented to

prevent students from reselling their discounted tickets to other buyers who are willing to pay full price for their tickets.

Consider the following scenario to answer the following questions: The Varsity, located in downtown Atlanta, is the world's largest drive-in restaurant. Located near the Georgia Tech campus, the drive-in attracts two distinct types of customers-college students and visitors to Atlanta. The owners are considering offering a student discount of $1 off their combo meal, which is regularly priced at $9. There are 5,000 students interested in purchasing a combo meal, with a maximum willingness to pay of $8. There are 5,000 visiting customers interested in purchasing the combo meal, with a maximum willingness to pay of $9. Assume that each customer, at most, will purchase a single meal and the marginal cost is $5. What is the difference in the amount of total consumer surplus if the Varsity offers the combo meal at the single price of $8 per combo meal instead of the previous single price of $9 per combo meal?

$5,000 increase

Which of the following is a real-world example of an attempt at perfect price discrimination?

a car dealership selling an automobile

Perfect price discrimination transfers the gains from trade from ________, but it also creates maximum efficiency.

consumers to producers

The local coffee shop, Latté Café, has a frequent-buyer program that offers a 5 percent discount to customers who "like" its business page on Facebook. This allows the firm to price discriminate because

customers who are sensitive to price will take the time to go to the website.

Many electronic brands such as Apple, Hewlett-Packard, and Epson typically offer refurbished products at lower prices. In this case, these companies are

not discriminating prices because the refurbished products are different from the new products.

In a price-discrimination setting, people with the most inelastic demand

pay the highest price for the same good.