chapter 16 Flashcards
Price discrimination:
selling the same product atdifferent prices
Reservation price:
the maximum price a customer will pay for a product
Perfect price discrimination:
charging each customertheir reservation price
Profit, Economic Surplus, andEfficiency Outcomes step one
Charge higher prices to those who will pay them.
Profit, Economic Surplus, andEfficiency Outcomes step 2
Offer selective discounts to induce new customers to buy.
Price discrimination is only feasible if: 2
you can prevent resale.
Price discrimination is only feasible if: 1
your business has market power.
Price discrimination is only feasible if: 3
you can target the right prices to the
Group pricing:
price discrimination by charging different prices to different groups of people.
Charge higher prices to groups
that value your product more.
Charge lower price to groups that are especially
price sensitive
Hurdle method:
Offer lower prices only to those buyers who are willing to overcome some obstacles.
The Logic:
Business travelers have meetings during the week but want to be home on the weekend.
Quantity discount:
when the per-unit price is lower when you buy a larger quantity.
Bundling
selling different goods together as a package.
