Ch.12 HW - 16. Yes, consumers are worse off by quantity...

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Ch.12 Homework 1. The movie theater cannot charge an intermediate price because of the unusual demand curve of senior citizens. The intermediate price would have to be between $5 and $10 and seniors will not attend a movie at any price higher than $5. Therefore, they will lose all profits from seniors if they use an intermediate price rather than price discrimination. 2. The elasticity of demand of low-income families is much smaller than that of high-income families so the university price discriminates to accommodate them because it still wants their business. 4. To effectively price discriminate, Alexx’s firm must be a market power, his consumers must have different price elasticities of demand, which he can identify, and he must be able to prevent resale. 5. The firm includes these restrictions to maximize profits by eliminating customers who have a low price elasticity of demand and are not willing to drive to the store.
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Unformatted text preview: 16. Yes, consumers are worse off by quantity price discrimination because consumer surplus is reduced. 19. Yes, the marginal cost curve affects a monopolys ability to price discriminate because it may prevent selling to a group of low price elasticity consumers if MC is too high or it could also open up a new group of consumers if MC is low. 24. a. General Motors is using multimarket price discrimination. b. The lower the price elasticity of demand, the higher price that General Motors can charge for each car. 26. a. Personalized consumer discounts are first-degree price discrimination. b. Past purchases can determine a consumers price elasticity of demand and help the store determine which products it can charge a higher price for and which ones should be discounted....
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