Home / Questions / The text describes three different "degrees" of price discrimination. Of these, which one
The text describes three different "degrees" of price discrimination. Of these, which one is theoretically capable of generating the greatest amount of economic profit for the firm? Why? In contrast, which one do you think has the greatest applicability to the range of goods and services consumers typically purchase?
66) Automobile manufacturers often use incentive programs, including special financing rates and cash rebates, to increase sales. However, a customer is usually restricted to choosing either the low financing rate or the rebate, but not both. Is this an example of price discrimination? If so, what type? Explain your reasoning.
67) Assume the economy is headed into a recession. Considering this, and recognizing that firms are slow to change the prices they charge for their products, are firms more or less likely to be able to pursue an effective markup pricing strategy in their pursuit of positive economic profit? Why?
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