Question 1

When a retailer varies price on items in ways that require buyers to spend extra time or effort to get a lower price, the retailer is using which of the following strategies to price discriminate?

Accepted Answer

When a retailer varies price on items in ways that require buyers to spend extra time or effort to get a lower price, it is known as Shopping around strategy. This strategy aims to identify buyers who are willing to spend more time and effort to get a better price, and offer them a discount accordingly. This is a form of price discrimination as it allows the retailer to charge different prices to different buyers based on their willingness to spend more time and effort. Therefore, the correct answer is A) Shopping around.

Question 2

Marcella spends an hour each week going through the weekly grocery store advertisements and then shops at four or five stores to get the best deals. Her friend Hua Xing shops at the same store each week and never looks at the advertisements. The grocery stores are practicing price discrimination through the _____ method because _____ has a lower reservation price.

Accepted Answer

The practice described is an example of hurdle pricing, in which a seller makes a deal available only to customers who can clear a certain hurdle, such as spending a certain amount of time or effort. Marcella, who spends an hour each week going through advertisements, has a lower reservation price than Hua Xing, who does not put in any time or effort to find deals. Therefore, the grocery stores are practicing price discrimination through the hurdle method to charge Marcella a lower price than Hua Xing. Segmentation pricing would involve the seller dividing the market into different groups that have different price sensitivities, but this is not evident in the scenario described.

Question 3

A large department store advertises time-of-day discounts for particular items on a special sale day. The store is using _____ to create a _____ for the most price-sensitive customers to gain low prices.

Accepted Answer

The scenario describes the use of fluctuating prices on a special sale day to create a hurdle for price-sensitive customers to gain low prices. This is an example of a pricing strategy known as hurdle pricing, which encourages customers to make purchases during specific times or conditions to get a lower price. This is different from bundling, alternate versions, and haggling, which are not mentioned or implied in the scenario.

Question 4

A furniture store owner allows its salespersons to lower a price by up to ten percent to gain a sale if the buyer appears price sensitive. The owner also instructs salespersons to confer with management about the possibility of higher discounts if needed to make a sale. This example of individually negotiated prices is a form of price discrimination known as

Accepted Answer

This is an example of haggling, as the salespersons are negotiating prices with the customers based on their perceived willingness to pay. The instruction to confer with management for higher discounts also suggests that prices are being negotiated on an individual basis.

Question 5

Which of the following is an example of price discrimination through haggling?

Accepted Answer

In option D, Arturo uses haggling as a way to price discriminate. He sells five identical shovels to five people at different prices based on negotiations with them. This is an example of haggling, where customers are charged different prices for the same product based on negotiations. The other options either involve different pricing based on factors other than negotiations or selling different products at different prices.

Question 6

In the hurdle method of price discrimination, a seller gives a lower price only to those who are price sensitive by

Accepted Answer

In the hurdle method, the seller gives a lower price to price-sensitive buyers but requires them to do something extra to get the lower price. This can include filling out a survey, signing up for a loyalty program, or providing proof of income. By adding this extra step, the seller can identify which customers are truly price-sensitive and adjust their pricing strategy accordingly. This method allows the seller to capture some additional revenue from customers who are not as price-sensitive while still offering discounts to those who are.

Question 7

Lena likes to buy vegetables at a farmer's market. Each week, she walks through the market to see what's available and compares prices offered by different sellers. She makes sure each seller knows that she is comparing prices and then buys from the one who gives her the best deal. Lena is practicing:

Accepted Answer

Lena is haggling, which means negotiating a price with a seller to get the best deal possible. This is a common practice in some markets and cultures where it's expected that customers will try to get a better price. The other options don't apply to this scenario. Segmentation refers to dividing a market into different groups based on characteristics like age or income. Bad service refers to a situation where a customer receives poor treatment from a business. Alternate versions refer to different versions of a product or service that a company might offer.

Question 8

Mario's Bed & Breakfast is willing to offer discounts to customers, but it does not advertise discounts. Discounts are given only to customers who ask if any discounts are available or who seem very indecisive when inquiring rates. As a result of this practice, some customers pay full price, and others pay lower prices. Mario is practicing _____ through _____.

Accepted Answer

Mario's Bed & Breakfast is practicing price discrimination through the hurdle method. This is because they are offering different prices to different customers based on their willingness to pay or their perceived ability to pay (hurdles). Customers who ask for a discount or seem indecisive may be given lower prices, while others pay full price. This is a common practice in the hospitality industry and allows businesses to increase their profits by charging different prices to different customers.

Question 9

Which of the following is NOT an example of the hurdle method of price discrimination?

Accepted Answer

The hurdle method of price discrimination involves setting up barriers or hurdles that customers must overcome in order to obtain a lower price. Options A, B, and D all involve some form of hurdle, such as requiring customers to purchase a certain version of a product, buy multiple items, or put in extra effort to receive a discount. Option C, on the other hand, involves simply segmenting the market into different groups and offering different prices based on those segments, which is not necessarily a form of the hurdle method.

Question 10

Why would a seller choose the hurdle method instead of group pricing to price discriminate?

Accepted Answer

The hurdle method is used when the seller cannot find a verifiable, hard-to-change characteristic on which to base group segmentation. Instead, the seller sets up a hurdle that customers must overcome to purchase the product, such as filling out a lengthy application or waiting in line for a limited quantity. By doing so, the seller can price discriminate based on customers' willingness to go through the hurdle, which is unrelated to any verifiable characteristic.

Question 11

Which of the following is NOT an example of the hurdle method of price discrimination?

Accepted Answer

Providing group discounts to price-sensitive consumers based on an identifiable characteristic is an example of personalized pricing or group pricing, not the hurdle method of price discrimination. The hurdle method involves setting up obstacles or "hurdles" that different customers must overcome in order to receive a lower price, based on their willingness or ability to pay. Examples include requiring customers to provide a coupon or commit to a minimum purchase quantity or frequency.

Question 12

Which of the following is NOT an example of price discrimination through the hurdle method?

Accepted Answer

The given option does not involve the hurdle method of price discrimination as it offers the same discount to all senior citizens without any condition to meet. Hurdle method refers to offering different prices to different customers based on the conditions or obstacles they have to overcome to purchase the product at a lower price. Option B, C, and D involve hurdle method as customers have to meet certain requirements or conditions to get a lower price.

Question 13

An airline charges its customers a $10 fee for purchasing a flight ticket by talking on the phone to a reservation specialist who can search available flight options. The airline does not charge a fee for purchasing a flight ticket on the airline's website. On the website, customers find it confusing to identify all options and make a reservation. This airline is practicing price discrimination through

Accepted Answer

The airline is creating a hurdle of worse service by charging a fee for purchasing a ticket over the phone, which makes it more difficult for customers to purchase a ticket.

Question 14

Coupons and rebates provide discounts to the especially price-sensitive consumers even though they are available to all consumers. Why do only price-sensitive consumers avail these discounts? Price-Sensitive consumers

Accepted Answer

Price-sensitive consumers are more aware of the discounts offered through coupons and rebates and are also more willing to take the time to locate and use them in order to save money. They are more likely to be motivated by price savings than other factors such as convenience, availability, or brand loyalty. Therefore, they are the ones who generally avail of such discounts.

Question 15

All of the following are commonly used to create a hurdle for price-sensitive consumers to overcome in order to get a lower price EXCEPT

Accepted Answer

The answer of All of the following are commonly used...

Question 16

Sergio sells identical shirts under two brand names - Rags and Bees. The shirts with the Rags label sell for $70, and the shirts with the Bees label sell for $40. The Rags shirts hang wrinkle-free on a hanger, and the Bees shirts are folded and have some wrinkles. This is an example of price discrimination through

Accepted Answer

Sergio is using an imperfect product (wrinkled shirts) to create a hurdle and differentiate between the two brands, allowing him to charge a higher price for the wrinkle-free Rags shirts.

Question 17

Malia sells headbands that are identical except that some do not have a small embroidered logo. Those with the logo sell for $10, and those without the logo sell for $5. Malia is using the price discrimination strategy of _____ through _____ to increase her revenue.

Accepted Answer

Malia is using the hurdle method by offering imperfect goods (headbands without the logo) at a lower price to segment the market and increase revenue.

Question 18

Which of the following is NOT a way of creating a hurdle that will cause price-sensitive buyers to self-identify?

Accepted Answer

Options A, B, and C are all methods that allow price-sensitive buyers to self-identify by either going through some inconvenience for a discount, waiting for a price drop, or opting for a less appealing, cheaper version of the product. Option D, however, suggests finding a characteristic to group customers, which does not involve self-identification through their actions or choices related to price sensitivity.

Question 19

Bayside Shoe Shop offers a BOGO (buy one, get one) special where customers can buy one pair at full price and get another pair at half-price. This form of price discrimination is referred to as

Accepted Answer

The BOGO offer at Bayside Shoe Shop is an example of quantity discount, where the price of the second pair is reduced as part of a promotion for buying in bulk. This type of price discrimination is common in retail and promotes customers to buy more products at a reduced rate.

Question 20

Kroger offers a discounted price on bottles of soda if customers buy four or more bottles. What kind of price discrimination strategy is this?

Accepted Answer

The hurdle method involves offering discounts to customers who overcome some sort of "hurdle" - in this case, buying a minimum quantity of an item. This strategy is used to segment customers based on their willingness or ability to buy in bulk, thus allowing the seller to discriminate between different types of buyers and maximize profits.

Quiz 17: Sophisticated Pricing Strategies

When a retailer varies price on items in ways that require buyers to spend extra time or effort to get a lower price, the retailer is using which of the following strategies to price discriminate?

A large department store advertises time-of-day discounts for particular items on a special sale day. The store is using _ to create a _ for the most price-sensitive customers to gain low prices.

Which of the following is an example of price discrimination through haggling?

In the hurdle method of price discrimination, a seller gives a lower price only to those who are price sensitive by

Which of the following is NOT an example of the hurdle method of price discrimination?

Why would a seller choose the hurdle method instead of group pricing to price discriminate?

Which of the following is NOT an example of the hurdle method of price discrimination?

Which of the following is NOT an example of price discrimination through the hurdle method?

Coupons and rebates provide discounts to the especially price-sensitive consumers even though they are available to all consumers. Why do only price-sensitive consumers avail these discounts? Price-Sensitive consumers

All of the following are commonly used to create a hurdle for price-sensitive consumers to overcome in order to get a lower price EXCEPT

Malia sells headbands that are identical except that some do not have a small embroidered logo. Those with the logo sell for $10, and those without the logo sell for $5. Malia is using the price discrimination strategy of _ through _ to increase her revenue.

Which of the following is NOT a way of creating a hurdle that will cause price-sensitive buyers to self-identify?

Bayside Shoe Shop offers a BOGO (buy one, get one) special where customers can buy one pair at full price and get another pair at half-price. This form of price discrimination is referred to as

Kroger offers a discounted price on bottles of soda if customers buy four or more bottles. What kind of price discrimination strategy is this?