Question 4 (25 pts) Listen to \"Episode 633: The Birth and Death of the Price Ta

Question

Question 4 (25 pts) Listen to "Episode 633: The Birth and Death of the Price Tag" of NPR's Planet Money podcast (Link here.) Write a short response (2-4 college-level sentences will do) to the following questions a. What are the benefits to the firm of using a uniform pricing policy versus negotiating the price with the customer? What are the costs to the firm? b. The podcast discusses dynamic airline pricing. Discuss one reason why an airline might raise (or not cut) the fare as the departure date of a flight approaches. Can you relate your discussion back to the topic of price discrimination?

Explanation / Answer

Ans. These are interesting questions , Let's start answering them :

a) One of the most important benefits of the firm of using a uniform pricing policy versus negotiating the Price with the Customer is that they don't have to Haggle and Bargain with the customers when Prices are uniform . Bargaining with the Consumers is itself a very time consuming and Hectic Process and by avoiding this , Productivity can also be increased manifold. Customers also would not have to waste their time in negotiating for the Product. Setting a Uniform Price may devoid the firm from getting higher profits from Wealthy Customers , which firms would have earned when Price was Negotiable. A well defined procedure is there which calculate all the costs of the product and thus We Get our Final Price.

b) The main reason of Airline Raising the fare as the departure date of the flight approaches is to earn maximum profits. They know that if a customer wants to book a flight ticket urgently , he would not be booking for the future date , rather he would be willing to Give Higher Prices.Thus , Increasing Profits of the Airline Company. This can also be related to Price Discrimination , where different Price is charged from Different Customers. If a customer books a flight 1 or 2 months before the departure date , he would be paying a different amount than the Customer booking a Day before Departure. This Policy of Price Discrimination helps the Airline Companies to Earn Higher and Extra Profits.

I hope you understood the answer. Do ask in case of Doubts.

A Thumsup would be Highly Appreciated !!

Best of Luck !! Keep Chegging !!

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