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In Each of the Two Cases Below, Why and How

question 44

Essay

In each of the two cases below, why and how does the firm choose to separate its customers into two markets?
a) A hotel in the city centre offers weekend room discounts.
b) Plastic surgeons charge their lower- income patients less than their rich patients for similar operations.


Definitions:

Deposited Cash

Cash that has been placed into a bank account or financial institution for safekeeping or to earn interest.

Bond Refunding

The process of retiring existing bonds by issuing new bonds, usually to take advantage of lower interest rates.

Advantageous

Providing a benefit or favor, leading to improvement or an increased chance of success.

Book Value

The net value of an asset or liability recorded on the balance sheet, calculated as its original cost minus any depreciation, amortization, or impairment costs.

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