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Question 1.

Price discrimination is a rational strategy for a profit-maximizing firm when

• it is possible to engage in arbitrage across market segments.

• it is not possible to segment consumers into identifiable markets.

• there is no opportunity for arbitrage across market segments.

• firms want to increase the amount of consumer surplus received by its customers.

Question 2.

Bubba's Hula Shack Bar and Bistro has begun giving customers who can show proof that they arrived at the establishment by public transportation a 10 percent discount on their total bill. This is an example of

• arbitrage.

• two-part tariff pricing.

• price discrimination.

• odd pricing.
Source  Download
Microeconomics
Edition: 7th
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Answer 1

there is no opportunity for arbitrage across market segments.

Answer 2

price discrimination.
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