Reflect on the Following Excerpt from a Washington Post Article

question 151

Multiple Choice

Reflect on the following excerpt from a Washington Post article about dynamic pricing by online retail giant Amazon.com and answer the following questions:
Few things stir up a consumer revolt quicker than the notion that someone else is getting a better deal.That's a lesson Amazon.com has just learned.Amazon,the largest and most potent force in e-commerce,was recently revealed to be selling the same DVD movies for different prices to different customers.It was the first major Web test of a strategy called "dynamic pricing," which gauges a shopper's desire,measures his means and then charges accordingly.The Internet was supposed to empower consumers,letting them compare deals with the click of a mouse.But it is also supplying retailers with information about their customers that they never had before,along with the technology to use all this accumulated data.While prices have always varied by geography,local competition and whim,retailers were never able to effectively target individuals until the Web."Dynamic pricing is the new reality,and it's going to be used by more and more retailers," said Vernon Keenan,a San Francisco Internet consultant."In the future,what you pay will be determined by where you live and who you are.It's unfair,but that doesn't mean it's not going to happen."

-The producer,who can charge each customer according to his or her willingness to pay for a product,can

• A) minimize producer surplus by using price discrimination.
• B) maximize consumer surplus by using perfect price prejudice.
• C) minimize market efficiency by using two-tiered price discrimination.
• D) maximize profits by using perfect price discrimination.
• E) minimize loss by using perfect price determination.

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Definitions:

Frederick Herzberg

An American psychologist best known for introducing the two-factor theory of motivation, distinguishing between hygiene factors and motivators.

Quality Control Standards

Guidelines and procedures designed to ensure that products or services meet specific requirements and are consistently produced with minimal errors or defects.

Entrepreneur

An individual who initiates, organizes, and manages a business venture, taking on financial risks in the hope of profit.

Resource Allocator

A role or function responsible for distributing resources, such as time, money, or materials, to various projects or departments.