Questions 13 and 14 rely on the following information: A new streaming service r
ID: 1159552 • Letter: Q
Question
Questions 13 and 14 rely on the following information: A new streaming service recognizes that it serves two different types of customers: old people and young people, and that old people have demand for their service given by Qotd (Pold)-60-Potd while young people have demand for their service given by Qyoung (Pyoung)-120-oung, where Qgroup is the demand for streaming services for people in that group, and Pgroup is the price charged to people in that group. The service's cost function is given by TC(Q)-0.0002Q, regardless of whether the video is being streamed by an old person or a young person. Assume that the streaming service can ask people to provide their age, but have no way to verify whether a person is old or young because all information is entered online 13. Which of the following statements is most likely to be true given the above information? The streaming service will be able to maximize profits by asking people to be honest about their ages and charging different prices accordingly. The streaming service will need to 3rd degree price discriminate to maximize profits. The streaming service will need to 2nd degree price discriminate to maximize profits. The streaming service should just charge everyone the same price to maximize profits. a. b. c. d. 14. Which of the following statements is most likely to be true given the above information? The streaming service will offer identical services to old people and young people. The streaming service will offer a lower quality product (possibly by including non- skippable ads) to old people and a higher quality product (possibly ad free) to young people. The streaming service will reference age groups in its advertising for any differentiated services it might offer. The streaming service will offer a lower quality product (possibly including non- skippable ads) to young people and a higher quality product (possibly ad free) to old people a. b. c. d.Explanation / Answer
Ans
B A is ready right answer. 3rd degree price discrimination involves here seeing demand of different groups and charging different prices to different groups. But here firm doesn't have perfect information and needs to ask people to provide right information
2 B is right since young demand more and marginal revenue is more in this market.
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