If the firm engages in a segmenting pricing strategy, what determines which segm
ID: 1152003 • Letter: I
Question
If the firm engages in a segmenting pricing strategy, what determines which segment pays a higher price?
For a quantity discount to work as a form of price discrimination, what must be true about the price elasticity of demand for high-volume consumers compared to the price elasticity of demand for low-volume consumers?
What is the defining feature of an oligopoly?
What is a Nash Equilibrium in oligopolistic competition?
If the firm engages in a segmenting pricing strategy, what determines which segment pays a higher price?
For a quantity discount to work as a form of price discrimination, what must be true about the price elasticity of demand for high-volume consumers compared to the price elasticity of demand for low-volume consumers?
What is the defining feature of an oligopoly?
What is a Nash Equilibrium in oligopolistic competition?
Explanation / Answer
(1) Which segment to pay a higher price is determined by price elasticity of demand across all segments. The segment where price elasticity of demand is lower, will pay a higher price.
(2) Price elasticity of demand for high-volume consumers must be higher (in absolute terms) compared to the price elasticity of demand for low-volume consumers (in absolute terms), if quantity discount is offered (to high-volume consumers).
(3) The defining characteristic of oligopoly is that price-output decisions of rival firms are interdependent, and the market is dominated by a few large firms.
(4) A Nash equilibrium is the outcome from which no player has any incentive to deviate.