canadianhifive asked:


An advertisement for a motel chain says that if you stay for three nights at the motel you can stay a fourth night for free. This represents a 25% reduction in price for people who stay four nights. Which of the following statements is more likely to be correct?

A. This practice represents market segmentation for the motel. It lowers the price for people whose demand for rooms is more sensitive to price.
B. If the motel were filled to capacity, it wouldn’t run this kind of “sale” on rooms. This practice is just off-peak pricing, not price discrimination.

The costs to society imposed by the markup pricing and excess capacity of monopolistic competition are mitigated by __________________.

A. Lower prices than achieved under perfect competition
B. A greater variety of available goods
C. Higher industry output
D. A higher quality of goods

Walter