Arial HAND IN WEDNESDAY, DECEMBER 13, 2017 WHEN YOU TAKE YOUR FINAL EXAM. 1. In

Question

Arial HAND IN WEDNESDAY, DECEMBER 13, 2017 WHEN YOU TAKE YOUR FINAL EXAM. 1. In economic terms, what is the ultimate goal of advertising? 2. From questions 2a through 2d, which of the following are cases of price discrimination and which are not? Explain why each case is a form of price discrimination or not a form of price discrimination. 2a. Damaged merchandise on toys are marked down. 2b. An Italian Restaurant gives their senior citizens customers discounts 2c. Food manufacturers place discount coupons for their merchandise 2d. Airline tickets cost more during the summer peak flying season. on the food they purchase from them. in newspapers assumptions of the theory of

Explanation / Answer

Answer to question 1. The basic purpose of advertising is to inform or make the people aware about the companies products or servies and create a need for them or pursuade them to buy the product be elaborating the features of such product and telling them how it is better than what others are offering. Thus, advertising is a medium or marketing tool through which a firm raises it's profits or expected profits and sells their product.

Answer to question 2. A) It is not a case of price discrimination as the toys are damaged and thus not brand new. As aproduct is damaged it loses it's charm and thus people prefer not to buso firms gives discount on such products to enhance the sale of such products.

B) Giving discounts to only senior citizens is a kind of price discrimination as people who are not senior citizens will not get such discount and thus will have to pay the original price.This is a case of 3rd degree price discrimination as different prices are charged from different set of customers.

C) This is also a case of price discrimination as food manufacturers place such discount coupons in such newspaper which are either read by the elite class or newspaper with the highest distribution and thus only such people get the products.

D) This is also a cse of price discrimination as sometimes airlines charges hih rates from people in the season than offseason and sometimes high rate from people who book tickets very late. Firms in this case use the concept of price discrimination and understand the customers demand to increase their profits.

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