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A Hotel with Market Power Charges Customers Who Check in Before

question 39

Essay

A hotel with market power charges customers who check in before 5:00 pm more than those who check in after 5:00 pm.Those who check in early are much more likely to use the hotel's pool.Explain why this price difference may not be price discrimination.


Definitions:

MR = MC

An economic principle where a firm maximizes its profit when its Marginal Revenue equals Marginal Costs.

Marginal Revenue

The extra income obtained from the sale of an additional unit of a product or service.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good which consumers are willing to purchase.

Quantity Axis

A graphical representation element used in economics to indicate quantities, such as quantities of goods produced or sold.

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