Discussion: Price Discrimination and P.E. of Demand

 
 
 

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Discussion: Price Discrimination and P.E. of Demand

CASE STUDY

Conduct a critical analysis of a posting by two of your classmates by the end of the workshop.

TASK

  1. The topic of your discussion response should be your classmate’s posting and should be written as if you were reviewing his/her posting in an academic journal. Your discussion response should, therefore, answer the following questions as applicable:
    1. Were your classmate’s arguments articulate and logical? Were the facts correct?
    2. Was the interpretation your classmate provided reasonable and consistent with experts in the field? Was your classmate consistent with both the substance and intent of his/her references?
  2. The focus for your critical analysis is not whether or not you agree with your classmate, but how well his/her position was presented. Each response should be at least 200 words in length and cite two academic sources.  Please strive to make your discussion responses ones that cause iron to sharpen iron. 

Peer Review 1:

The main concept behind pricing inequality is that a business is attempting to make use of distinct market price conductivity. If there are a rather inelastic market for certain individuals, it means they are able to pay a premium amount. It will boost its sales and earnings if the organization can pay better rates on these customers. Other customers will be more pricing-sensitive (elastic demand) but will react to special deals and discounts on rates. If it can isolate these customers and thus decrease their surplus value, the business would benefit.

1. Time of buying the ticket for a journey: There’s really no hard rule, but it appears to be better value for money if you purchase a ticket a few months ahead of time. If the demand for a particular plane is large, the air carrier will start to raise the cost of that flight.

This suggests that some of those able to pay a premium price will purchase the remaining seats (inelastic demand). The carrier will be doing the reverse and drop the cost if a domestic plane is not performing quite well. This lowered price draws further price conscious individuals which mean that perhaps the flight can fill up.

2. Unsocial hours cheaper: These flights would appear to be cheaper since those flight times become less common. If you take a weekend’s holiday, for instance, On Sunday, most citizens would like to return late. Such late Friday flights are much more costly that Sunday planes throughout the morning hours.

3. Extra money asked for more leg space: Emirates sold a seat with three mm of leg room for £ 30 in premium economy. I leapt at the bid at 185cm. It’s nice £30 expenditure for me. With nearly 40 percent of seats in premium economy being filled up with additional legroom seating, it was very common.

Since it’s a somewhat unique commodity, it’s not exactly pricing disparity, however the airline is willing to offer higher premiums to those customers with somewhat less inelastic. You can go to the opposite side and spend £ 15,000 as a first air tickets, in comparison to the three mm of additional legroom (James, 2012).

4. Traveling in the peak hours: It would be far more costly to fly at peak hours. Travelling through the week is one good example. I once looked at flight costs in August via New York to London.

The cheap fares was well over £ 1,000 between Monday through Friday am surprised at the prices. Then, once I moved the wording to Wednesday, the price dropped to £ 350.

The explanation is that the buyers are entrepreneurs who fly from Monday to Saturday. Their request appears to be more relatively elastic (because it is paid for company expenses).

You are much more cost resilient and get a more flexible market because you are more relaxed and able to fly on the weekends. Based on the period of the year, airline tickets also differ (Darin, 2007).

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