Sunday, May 12, 2013
Price Discrimination z | In the town of Woodland, California, there are many dentists but only one eye doctor. Are senior citizens more likely to be offered discount prices for dental exams or for eye exams? Why?
In the town of Woodland, California, there are many dentists but only one eye doctor. Are senior citizens more likely to be offered discount prices for dental exams or for eye exams? Why?
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The dental market is competitive, whereas the eye doctor is a local monopolist. Only firms with market power can practice price discrimination, which means senior citizens are more likely to be offered discount prices from the eye doctor. Dentists are already charging a price close to marginal cost, so they are not able to offer senior discounts.
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