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Unformatted text preview: 1. Market Segmentation a. Demand changes based on how much people are willing and able to pay b. They want to produce at the intersection of the MR curves of both their markets i. Producing at that point equalizes the MR of both markets ii. Exmp. Airline Tickets 1. people who are on vacation have a elastic demand curve, if the tickets are too much, you’ll change your plans and go somewhere else 2. Business people don’t have as much options, so they have a more Inelastic demand curve c. Identification i. How do the businesses know how much you’d be willing to pay? 1. Identification features: a. Movie theaters can charge different prices based on age b. Age c. Race 2. Arbitrage a. Consumers undermining the work of the business 3. Multiple pricing a. Exmp: State Fair i. It costs to get in ii. Once you’re in, it still costs to ride the rides etc....
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This note was uploaded on 04/07/2008 for the course ECO 2302 taught by Professor Smith during the Spring '08 term at University of Texas at Dallas, Richardson.
- Spring '08