Refer to the scenario above. The housekeeper behaves in this ...

[K@]

Refer to the scenario above. The housekeeper behaves in this particular way due to the ________.
 
  A) existence of asymmetric information
  B) presence of a positive externality
  C) presence of a free-rider problem
  D) existence of high incentive to work

Question 2

Why do some firms price discriminate? Relate your answer to the common practice of public colleges charging lower tuition to in-state students and higher tuition to out-of-state students.
 
  What will be an ideal response?

[meganlapinski]

Answer to Question 1

A

Answer to Question 2

Price discrimination helps businesses capture more consumer surplus and hence increase their economic profit. Basically the firm charges more to people who are willing to pay more. For a public college, out-of-state students will likely have a higher willingness to pay for attending that college because, by leaving their home state, they are demonstrating that they truly want to attend the college. If the college charged in-state residents the same tuition as out-of-state residents, the college would miss the chance to maximize revenue from each grou

[K@]

Thanks for the timely response, appreciate it

[cassie_ragen]

Excellent