Author Question: The Wells Fargo Bank Tower in downtown Los Angeles displays a sign at its parking entrance that ... (Read 55 times)

anjilletteb · **on:** Jun 30, 2018

The Wells Fargo Bank Tower in downtown Los Angeles displays a sign at its parking entrance that clearly shows that the per-hour parking charges are higher for people who visit the building for a short while. How is this consistent with the general principle of price discrimination?

Question 2

To practice price discrimination, a firm:
a. must face a relatively elastic demand curve.
b. must have customers with different elasticities of demand.
c. must not be able to distinguish between customers based on elasticities of demand.
d. must not be able to prevent resale of the product.
e. must be a price taker.

amynguyen1221 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

A document courier whose customers want quick pickup and delivery wants to stay for only the short time required to visit a customer's office. Even if a cheaper lot is only a block away, there will be a 15-minute round-trip walk to Wells Fargo. Hence he is an inelastic demander of space in this particular building and is willing to pay a higher price to save time.

Answer to Question 2

b