BUSI 620 help Making Decisions/uophelp.com BUSI 620 help Making Decisions/uophelp.com | Page 28

b) Problems: 12, 13, and 15.
Discussion Question 7: Quantity discounts are not a form of price
discrimination because the firm saves on handling large orders? True or
false? Explain
Discussion Question 8
(a) Why are first- and second-degree price discrimination less common
than third- degree price discrimination? (b) Are lower airline fares at
midweek an example of third-degree price discrimination? (c) Under
what conditions would it not be useful to charge different prices in
different markets (i. e., practice third-degree price discrimination) even
if possible?
Discussion Question 11: How is the transfer price of an intermediate
product determined when:
a) There is no external market for the intermediate product
b) A perfectly competitive external market for the intermediate product
exists
c) An imperfectly competitive external market for the intermediate
product exists?
Discussion Question 13: What are:
a) The advantages of cost-plus pricing?
b) The disadvantages of cost-plus pricing?
c) Why is incremental cost pricing the correct pricing method? Why is
full-cost pricing equal to it?
Problem 5
The Dairy Farm Company, a small producer of milk and cheese, has
estimated the quantities of milk and cheese that it can produce with three
levels of total expenditures or total costs. These are indicated in the
following table. If the price of milk (product A) and the price of cheese