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jonnyjon jonnyjon
wrote...
Posts: 335
A week ago

Question 1.

If firms differentiate their products in different ways and charge different price because of these differentiation factors, then



transactions costs are being ignored.



the firm must not be maximizing profit.



demand must be perfectly elastic.



the law of one price is not violated.



Question 2.

Table 16-1

COMPANYPRICE
Amazon.com$13.47
BarnesandNoble.com  16.23
Walmart.com  13.47
Rakuten.com  17.15

Table 16-1 shows the price for the hardcover version of the novel The Girl on the Train by Paula Hawkins at four online bookstores.



Refer to Table 16-1. Which of the following can one conclude from the data above?



Amazon.com and Walmart.com are able to charge a lower price for the item because they are more cost efficient than the other two companies.



Walmart.com and Amazon.com have deliberately under-priced their product to force the other two companies out of business.



The item offered for sale is similar but not identical; the quality of service and delivery time might vary from store to store, which justifies the price differences.



The data provides clear evidence of price discrimination in the online bookstore market.

Textbook 

InMicro


Edition: 1st
Authors:
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Answer verified by a subject expert
krobdancekrobdance
wrote...
Posts: 301
A week ago
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Answer 1

the law of one price is not violated.



Answer 2

The item offered for sale is similar but not identical; the quality of service and delivery time might vary from store to store, which justifies the price differences.

1

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wrote...
A week ago
Good timing, thanks!
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