Each week, a department store places a different item of clothing on sale. Which of the following is an explanation based on price discrimination for why the store conducts such regular sales? A. The store attempts to sell the item to customers with high reservation prices first, and then sells to customers with lower reservation prices later. B. The store attempts to sell the item to customers with relatively elastic demand first, and then sells to customers with relatively inelastic demand later. C. The store attempts to sell the item to customers with relatively inelastic demand first, and then sells to customers with relatively elastic demand later. D. Both A and C. E. Both A and B.

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8 May, 23:50

Each week, a department store places a different item of clothing on sale. Which of the following is an explanation based on price discrimination for why the store conducts such regular sales? A. The store attempts to sell the item to customers with high reservation prices first, and then sells to customers with lower reservation prices later. B. The store attempts to sell the item to customers with relatively elastic demand first, and then sells to customers with relatively inelastic demand later. C. The store attempts to sell the item to customers with relatively inelastic demand first, and then sells to customers with relatively elastic demand later. D. Both A and C. E. Both A and B.

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Garfield · Answer 1

Option D is correct, Both A and C.

Explanation:

Price discrimination is a technique of micro-economic manipulation, where the same manufacturer transacts equal or substantially equivalent products or services in various markets at different prices.

Price discrimination occurs on the market where the same manufacturer sells similar goods or services at various prices. There was a misunderstanding. While production costs are the same, the retailer is able to improve price based on the location, financial standing of buyers, demand for products, etc.