Different groups of consumers different prices

Assignment Help Microeconomics

Reference no: EM133210829

Question: An Internet company currently charges a single price to all of its customers of £30 per month for ultra-fast broadband. The CEO of the company consults students from Lancaster University as to whether there are alternative pricing strategies that might bring the firm greater profits.

(a) The CEO is very keen to explore the option of perfect price discrimination. Using an appropriate diagram, explain to her how this would work in practice.

(b) Having heard your explanation, the CEO asks if you could explain block pricing as a way around the problems of implementing perfect price discrimination. In preparing your advice, she asks you to consider the difference in her customers willingness to pay for access to the service.

(c) The CEO is also keen to explore differences between the company's consumers and wonders whether these effectively separate markets could be exploited to increase the company's profits. What would you advise?

(d) Having considered the options suggested to her, the CEO decides that the charging different groups of consumers different prices is the strategy she wishes to adopt. How should she determine which groups pay which prices?

Reference no: EM133210829

Questions Cloud

Identify four segmentation descriptors : Identify four (4) segmentation descriptors (e.g., if a company chose usage-rate segmentation they might decide between heavy and light users)

Do you agree with the above statement : the throughput or effective bandwidth of the wireless network will be less than in an Ethernet-based wired network and Do you agree with the above statement

How someone using utilitarianism might view this issue : Explain how someone using utilitarianism might view this issue. Explain how someone using Kantian moral theory might view this issue

Discuss the nature-nurture debate : AV Consider the nature-nurture debate. (Make sure that you read about this issue in the text and Lecture Notes).

Different groups of consumers different prices : The CEO is very keen to explore the option of perfect price discrimination. Using an appropriate diagram, explain to her how this would work in practice.

What is the broken windows theory of policing : What is the broken windows theory of policing? How has the number of stops in New York City changed during the past couple of decades

Discuss functional conflict : An organization without functional conflict frequently lacks the energy and ideas to create effective innovation.

How did world war i inspire goldman : How did World War I inspire Goldman and DuBois to call for new understandings of patriotism and democracy in the United States? Why did some Americans

How to prevent and minimize the spreads of diseases : How to prevent and minimize the spreads of diseases as well work with government official to look for treatment and prevention of diseases

User Account

All Pages