Consider the following examples and categorize each as either first-degree, second-degree, or third-degree price discrimination.
a) The publishers of the Economist magazine charge a lower subscription price to students than non-students. In addition, the average price per issue is lower for a 2-year subscription than an annual subscription.
b) In many countries, governments issue bonds via bond auctions. In some countries, such as Germany and Cambodia, investors pay for the bonds based on the prices they bid at the auctions.
c) Recreation Country Club charges golfers $12 to play the first 9 holes of golf on a given day, $9 to play an additional 9 holes, and $6 to play 9 more holes.
d) The Orange Telecom charges you $0.10 per minute to make a long-distance call from Monday through Saturday and $0.05 per minute on Sunday.
e) You can pay for and download MP3 music at the package rates of 10 songs for $10, 30 songs for $27, or 100 for $75.
f) When you fly from Singapore to Kuala Lumpur, the airline charges you $350 if you buy your ticket 14 days in advance, but $450 if you buy the ticket on the day of travel.
First degree price discrimination occurs when each person pays the reservation price for the product. Second degree price discrimination occurs when the price charged changes as the quantity consumed of the product changes. Third degree price discrimination occurs when different prices are charged for different groups of consumers.
a. The former cases represents third degree price discrimination because different prices are charged for different groups of consumers. The latter case represents second degree price discrimination because those subscribing for two years will pay a lower price for the product.
b. This is the case of first degree price discrimination because this is based on the price each person is willing to pay for the product.
c. This is the case of second degree price discrimination.
d. This is the case of third degree price discrimination. because different rates are charged on different days.
e. Second Degree Price Discrimination.
f. Third degree price discrimination
Consider the following examples and categorize each as either first-degree, second-degree, or third-degree price discrim...
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