Question
In: Economics
Suppose Cub Foods is offering BOGO (buy one get one free) deal on avocados. If you...
Suppose Cub Foods is offering BOGO (buy one get one free) deal on avocados. If you buy two avocados, you pay $4. If you buy one, you pay $2 each.
a. Explain how this scheme is not a proper 2nd degree (volume) price discrimination scheme. How would you structure a proper 2nd degree (volume) PD scheme?
Solutions
Expert Solution
A.
A second degree price discrimination, takes place when different price is charged on the basis of quantity of goods purchased or consumed. For example, for 2 Kg of Apple, $5 is charged and for 1 Kg of Apple, $3.5 is charged. It shows the second degree price discrimination, because person buying 2 Kg Apple, get discounts in price.
In the given scenario, the second degree price discrimination does not work, if Price for 2 avocados is $4 and for 1 avocados, it is $2. Here, average price of avocados remains same for both the consumers if they buy 1 avocado or two avocados and it is $2 per avocado. Hence, there is no discrimination.
To make proper second degree price discrimination, if price of 2 avocados purchased at one time is $4, then price of only 1 avocado purchased, should be $3. It will make price discrimination, because if somebody buys in bigger quantity, will get price discounts.
Rahul Sunny answered 11 months agoRelated Solutions
A. Provide an intuitive explanation for why a "buy one, get one free" deal is not...
A. Provide an intuitive explanation for why a "buy one, get one
free" deal is not the same as a "half-price" sale.
(L06)
B. The Einstein Bagel Corp. offers a frequent buyer program
whereby a consumer receives a stamp each time she purchases one
dozen bagels for $6. After a consumer accrues 10 stamps, she
receives one dozen bagels free. This offer is an unlimited offer,
valid throughout the year. The manager knows her products are
normal goods. Given this...
a)How is a buy one get one free deal different from a 50% off sale? b)...
a)How is a buy one get one free deal different from a
50% off sale? b) which deal would a consumer prefer and c) which
deal will a retailer prefer. Explain
The Fast N' Hot food chain wants to test if their "Buy One, Get One Free"...
The Fast N' Hot food chain wants to test if their "Buy One, Get
One Free" program increases customer traffic enough to support the
cost of the program. For each of 15 stores, one day is selected at
random to record customer traffic with the program in effect, and
one day is selected at random to record customer traffic with
program not in effect. The results of the experiment are documented
in DATA. For each store, compute difference = traffic...
The Fast N' Hot food chain wants to test if their "Buy One, Get One Free"...
The Fast N' Hot food chain wants to test if their "Buy One, Get
One Free" program increases customer traffic enough to support the
cost of the program. For each of 15 stores, one day is selected at
random to record customer traffic with the program in effect, and
one day is selected at random to record customer traffic with
program not in effect. The results of the experiment are documented
in DATA. For each store, compute difference = traffic...
A supermarket chain wants to know if its "buy one, get one free" campaign increases customer...
A supermarket chain wants to know if its "buy one, get one free"
campaign increases customer traffic enough to justify the cost of
the program. For each of 5 stores it selects two days to run the
test. For one of those days the program will be in effect. At 1%
significance level, test the claim that the program increases
traffic. Use t-distribution.
For parts (a), (b), (c), round your answers to 2 decimal
places.
(a) ¯dd¯ =
You MUST...
Suppose you are buying an $80,000 car , you decide to buy it and get it...
Suppose you are buying an $80,000 car , you decide to buy it and
get it financed and make monthly payments.Your budget is $3,000 for
monthly payments, and you can get financing at 11% APR.
With the help of an amortization table, show approximately how
long will it take you to pay the loan back? Remember the monthly
payment must be around your budget. Work with Excel. Copy and paste
the first four months and last two months of the...
1.Suppose you want to buy a car that costs $19,000. If the dealer is offering 100%...
1.Suppose you want to buy a car that costs $19,000. If the
dealer is offering 100% financing at 6.2% APR for a 5 year loan,
what would be the monthly payment? (Answer to the nearest
penny)
2.Suppose you want to buy a house that costs $850,000. You are
required to put 10% down, which means the amount to be borrowed is
90% of the price of the house. If you want a 30 year mortgage, and
the borrowing rate is...
One of Matt's favourite brands is offering a deal on its’ hooded jackets, which is sold...
One of Matt's favourite brands is offering a deal on its’ hooded
jackets, which is sold at $100 a piece. The promotion claims that
you can “get the second piece 50% off.” It means, if Matt buys a
jacket for $100, he can buy the second jacket (of different colour)
for 50% of the original tag price, $50. In addition, if Matt wants
a third jacket, he has to pay $100 again, but now he has the
privilege to purchase...
You are the number one free agent in the National Hackey-Sack League. You get offered three...
You are the number one free agent in the National Hackey-Sack
League. You get offered three different 5-year contracts, denoted
A, B, and C below. Assuming you can earn 12% per year on your
investments, which contract should you take? Contract A: You are
offered $100,000 today, $200,000 in one year, and a final payment
of $200,000 in five years. Contract B: You will get $200,000 today,
$200,000 in three years, and a final payment of $100,000 in five
years....
You are the number one free agent in the National Hackey-Sack League. You get offered three...
You are the number one free agent in the National Hackey-Sack
League. You get offered three different 5-year contracts, denoted
A, B, and C below. Assuming you can earn 12% per year on your
investments, which contract should you take?
Contract A: You are offered $100,000 today, $200,000 in one
year, and a final payment of $200,000 in five years.
Contract B: You will get $200,000 today, $200,000 in three
years, and a final payment of $100,000 in five years....
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Arthur buys $2,200.00 worth of stock. Six months later, the value of the stock has risen...
- The Following table is based on a time study for a metal working operation Obs (minutes...
- Write a method that returns the percentage of the number of elements that have the value true...
- Jane is the financial manager for Alpha Corporation. She has been asked to perform a lease-versus-purchase...
- 7. Choose the bond that is least polar (how would you do this without looking at...
- SCHEME [4 marks] Define a procedure called valid_date? that takes three arguments representing the year, month,...
- Suppose a company is looking to hedge a risk in the derivatives market. What, fundamentally, is...
ADVERTISEMENT