Suppose Dublin Electronics charges regular customers 90 for a Blu-ray player but allows senior citizens to purchase the same item for 75. Is this likely to be a successful price discriminating strategy?
A) No, because there are many different brands of Blu-ray players and consumers will shop around.
B) Yes, because senior citizens are likely to have a more elastic demand and therefore will be willing to pay a lower price compared to regular customers.
C) Yes, firms price discriminate to maximize profits.
D) No, price discrimination will not be effective because the store cannot prevent senior citizens from buying large quantities of Blu-ray players and reselling them for a profit.
Question 2
A consumer's budget constraint is
A) the limited income that a consumer has to spend on goods and services.
B) the extent to which one's preferences are limited by one's income.
C) the price ratio a consumer faces in the marketplace.
D) the rate at which the consumer must give up one good to purchase an additional unit of the other goods in the market.
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