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J C asked in Social ScienceEconomics · 1 decade ago

Economics: Price Discrimination, Marginal Revenue, etc?

Thx:

a) What is a reservation Price and when would a customer choose to use it?

b) How do we computer marginal revenue if we are given: Reservation Price, Total Revenue?

c) When evaluating Price Discrimination, what do these abbreviations mean: TR; TC;

d) What is imperfect price discrimination?

e) What is a uniform price and when would it be better for a business than price discrimination?

f) What the hurdle method and why does it create more profits than uniform pricing, but less than perfect discrimination? What happens to economic surplus under the hurdle method?

3 Answers

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  • 1 decade ago
    Favorite Answer

    A. The maximum price a consumer is willing to pay for a good.

    B. More info needed: quantity sold?

    C. TR: Total Revenue; TC: Total Cost

    D. Charging different customers different prices for the same good. Perfect price discrimination is charging every customer their individual reservation price.

    E. A uniform price is a market price that all customers are charged.

    F. Not familiar with the "hurdle method." The hurdle rate is the rate of return that a company must expect to receive from an investment before undertaking it.

  • 7 years ago

    Hurdles are a kind of price discrimination that ensure discounts are only issued when needed to get the sale. That is why they generate greater profits. One example will be early-bird specials at a restaurant - to get the discount you have to jump over the figurative hurdle of eating dinner at 4 PM. This ensures that only those people who are really focussed on price get the discount, everyone else would rather pay full price and eat at a more normal time.

  • Anonymous
    5 years ago

    monopoly mr=mc<p because they face a downward slopping demand curve. Just graph it.

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