Explain how this is form of price discrimination

Assignment Help Business Economics

Reference no: EM131392135

A university charges the same tuition and fees for students who take 12 credits per term as those who take 18 credits per term. Those who average 18 credits per term can easily graduate (obtain their baccalaureate degree) in 3½ years while those who average 12 credits per term will take at least 5 years to graduate.

a. Explain how this is a form of price discrimination even though everyone pays the same price each term.

b. Explain what assumptions are being made about the relative elasticities of demand for education for those who average 12 credits per term in comparison to those who average 18 credits per term.

c. Rationalize why those elasticities (from part b) might be correct, or is the university making a mistake by pricing in this manner?Explain fully.

Reference no: EM131392135

Questions Cloud

What is the cause of inflation : What is the cause of inflation? What does inflation do to the purchasing power of money? What are the likely impacts of a congestion tax predicted by economic theory? (could be a zone or other type of congestion tax) How does the most recent unemploy..

Using payoff matrix to determine the equilibrium outcome : Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell smart phones: Flashfone and Pictech. The game between Flashfone and Pictech is not an example of the prisoners' dilemma.

Virtually everyone who lives there is of chinese heritage : San Francisco’s Chinatown is one of the mostly densely populated places in the world…and virtually everyone who lives there is of Chinese heritage. Chinese culture, traditions, and language are actively taught to children who live in the area; most r..

Feasible set for economy and hypothetical optimal bundle : Consider, an economy, of 2 period households, with a growing population in which each person is endowed with y1 units of consumption when young, and y2 units when old. Draw the feasible set for this economy and hypothetical optimal bundle for this ec..

Explain how this is form of price discrimination : A university charges the same tuition and fees for students who take 12 credits per term as those who take 18 credits per term. Those who average 18 credits per term can easily graduate (obtain their baccalaureate degree) in 3½ years while those who ..

Field of managerial economics and globalization : Propose two (2) applications of the knowledge that you have learned in this course to your current or a future position. Provide a rationale for your response. Create a list of three (3) best practices to follow in the field of managerial economics a..

Linear tax affects outcomes in terms of output-work effort : Show how moving from a lump sum tax to a linear tax affects outcomes in terms of output and work effort. What is the effect on economic efficiency? How does your picture show this? You should use a linear PPF.

To advertise or not to advertise : To advertise or not to advertise Suppose that Creamland and Dairy King are the only two firms that sell ice cream. reamland will choose not to advertise and Dairy King will choose to advertise. Again, suppose that both firms start off not advertising..

Find the equation for the budget set of an individual : Let Nt = nNt−1and Mt = zMt−1 for every period t,where z and n are both greater than one. The money created each period is used to finance a lumpsum subsidy of a ∗ t goods to each young household. Find the equation for the budget set of an individual ..

User Account

All Pages