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Managerial Economics and Organizational Architecture.

3. Some tennis clubs charge an up-front fee to join and per-hour charge for court time. Others do not charge membership fee but charge a higher per-hour fee for court time. Consider clubs in two different locations. One is located in a suburban area where the residnets tned to be of similar age, income, and occupation. The other is in the city with a more diverse population. Which of the locations is more likely to charge a membership fee? Explain.

4. Consider three firms: a shoe store at the mall, an automoble dealership, and a house painting firm.
a. Which firm would you expect to engage in the most price discrimination? Why?
b. How has the Internet changed the pricing policies of these businesses?

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3. The tennis club in the sub urban area is more likely to charge a membership fee while the club in the city will more likely charge per hour fee. The main reason for this phenomenon is the fact that people in the suburban area are of similar age, income and occupation and the policy to charge membership will suit everybody. If there is lot of diversity in the population, like in the case of city, it is difficult to charge ...

Solution Summary

House painting firm will engage in most price discrimination.

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