Some tennis clubs charge an up-front fee to join and a per-hour charge for court time. Others do not charge a 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 residents tend to be of similar age, income, and occupation. Which of the locations is more likely to charge a membership fee? Explain.© BrainMass Inc. brainmass.com October 16, 2018, 4:26 pm ad1c9bdddf
The first kind of pricing (up-front fee plus per-hour charge) is a kind of price discrimination, which is usually ...
Which of the locations is more likely to charge a membership fee? Explain.
Social Welfare Implications of Price Discrimination
1) Price discrimination is often defended on the basis of equity (Charge less for the poor than the rich!). Is this the only rationale for price discrimination?
2) If a market price is determined by a dominant price leader, what happens to the price (gets higher or lower) if the number of the followers increase? (First review Figure 11.2 on page 504.)
(See attached diagram).
3) What is transfer pricing? Give an example.
4) Discuss the social welfare implications of price discriminationView Full Posting Details