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zar zar
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Posts: 370
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A week ago

Question 1.

A perfectly competitive firm cannot practice price discrimination because



it does not advertise; this prevents the firm from marketing its product to different segments of the market.



the firm can only charge the market price.



a firm that breaks even in the long run cannot afford to engage in yield management.



each consumer in a perfectly competitive market has the same willingness to pay.



Question 2.

Article Summary

Brandeis University economist Benjamin Shiller has written a paper which explains how Netflix could combine demographic data with customers' Web browsing habits to more accurately predict how much a customer would be willing to pay for a Netflix subscription, and how using this method of first-degree price discrimination would generate higher profits. Shiller explains that the more information a company has about its customers, the better it is at being able to set prices to increase profits. As he stated in his paper, "Using all variables to tailor prices, one can yield variable profits 1.39 percent higher than variable profits obtained using non-tailored 2nd degree price-discrimination. Using demographics alone to tailor prices raises profits by much less, yielding variable profits only 0.14% higher than variable profits attainable under 2nd degree [price discrimination]."

Source: Brian Fung, "How Netflix could use Big Data to make twice as much money off you," Washington Post, September 4, 2013.



Refer to the Article Summary above. The pricing method described in the article is referred to as first-degree price discrimination. First-degree price discrimination is also known as



perfect price discrimination.



two-part tariff pricing.



odd pricing.



arbitrage.

Textbook 

InMicro


Edition: 1st
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kamronetkamronet
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Posts: 334
A week ago
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Answer 1

the firm can only charge the market price.



Answer 2

perfect price discrimination.

1

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zar
wrote...
A week ago
Exactly what I needed for my project, TYSM
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