Question

Consider the example: (1) At CUNY for the same undergraduate course credit foreign students pay a higher tuition rate than U.S. students. (2) Moreover, undergraduate students pay the same tuition for 15 (or even 18) credits per semester as they do for 12.

Find the correct statement about this example.

	A.	One difference between part (1) and part (2) is: (1) unobservable consumer characteristic vs. (2) observable consumer characteristic.
	B.	One difference between part (1) and part (2) is: (1) observable consumer characteristic vs. (2) unobservable consumer characteristic.
	C.	None of the other answers are correct.
	D.	Only in part (1) the seller offers the buyers a menu of options.
	E.	One difference between part (1) and part (2) is: (1) market segmentation vs. (2) bundling.
	F.	Only in part (2) the buyers make their own self-selections.

Answer 1

	Options	Explanation
A.	One difference between part (1) and part (2) is: (1) unobservable consumer characteristic vs. (2) observable consumer characteristic.	In both cases part ( 1) and part (2) the consumer characteristics are observable , i .e. in part one the consumers are American and foreign students and part 2 they are undergraduate students. Thus it is incorrect.
B.	One difference between part (1) and part (2) is: (1) observable consumer characteristic vs. (2) unobservable consumer characteristic.	In both cases part ( 1) and part (2) the consumer characteristics are observable , i .e. in part one the consumers are American and foreign students and part 2 they are undergraduate students. Thus it is incorrect.
C.	None of the other answers are correct.	This is not correct
D.	Only in part (1) the seller offers the buyers a menu of options.	In both cases CUNY is offering a menu to the buyers (students in this case) .Thus this statement is incorrect.
E.	One difference between part (1) and part (2) is: (1) market segmentation vs. (2) bundling.	This is the correct statement because the case (1) is an example of market segmentation where the product is being offered at differential prices and case (2) is of bundling where different items (credit in this case) are being sold together as a package.
F.	Only in part (2) the buyers make their own self-selections.	In both the cases the buyers are not making self -selection rather in both cases they are choosing from the menu offered by CUNY. This statement is incorrect