Question

Identify the pricing policy(ies) used by the producers in each case. Give reasons and important conditions to support
your arguments.
(a) A kindergarten school announced the following tuition fees:
Initial payment 3,000 Baht
Tuition fee 20,000 Baht/semester
English teachers 7,000 Baht/semester
(b) Yamaha (Thailand) sets repairing service charges for the stereo sets bought from abroad twice as high as the ones
bought in Thailand.
(c) The KFC Restaurant gives away free coupons by distributing them in many magazines. Customers who present the
coupon at the time of their purchase can get special discounts as specified in the coupon.
(d) Internet service fee from Internet Thailand Co. Ltd. stated that
Application fee 300 Baht
Connection during 8:00 – 21:00 34 Baht/hour
Connection during 21:01 – 7:59 15 Baht/hour

Topic : monopoly

Answer 1

Ans A In case of kindergarden school, there are large number of kindergarden schools in the city, so due to large no. sellers, and all sellers are selling homogenous i.e. same product, so there should be a price rigidity, school should charge that price, which are charging by other similar schools.

Ans B As Yamaha is charging high price on servicing of imported stereo, so it shows a feature of monopoly competition market because seller is charging high price but still buyer is ready to purchase, so seller can set discriminating price policiy.

Ans c Kfc restaurant is a part of monopolistic competition, which has large number of buyers and sellers and all sellers are selling heterogenous or differentiated product, this market puts more emphasis on non price comperition like by providing offers etc, so seller can opt for discriminating price policy

Ans D Internet service provider is comes under the oligopoly market, generally in oligopoly market producer do competition on non price competition i.e. Competition on the basis other than price cutting, in this market there are only few sellers, so sellers can set discriminating pricing policy.

Thanks