Question

In: Economics

Martin is a piano teacher who wants to price discriminate across his students based on their...

Martin is a piano teacher who wants to price discriminate across his students based on their household income. He doesn't know the exact household income of his students, but what is a simple, verifiable characteristic he could use as a proxy for student income?

age

hair color

parents' musical background

prior purchasing history

year in school

address

number of siblings

Solutions

Expert Solution

PRIOR PURCHASING HISTORY

Explanation: Purchasing power is the amount of goods and services that can be purchased with a unit of currency. If one knows about the prior purchasing history, one can estimate the income of that person on the basis of the amount of the money he/she spends.

Rahul Sunny answered 2 years ago
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