Colleges Are Able to Practice Price Discrimination by Separating Their

question 60

Essay

Colleges are able to practice price discrimination by separating their students into distinct income groups using the Free Application for Federal Student Aid (FAFSA)and by offering a two-tiered pricing structure based on residency.Based on what we know about price elasticity of demand,what is generally true about these distinct groups?

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Definitions:

Resell

The act of selling an item that one has previously purchased or acquired, potentially at a different price point.

Marginal Revenue

The additional income received from selling one more unit of a good or service, critical for determining the most profitable level of production.

Third Unit

In economic terms, it refers to purchasing or producing a third unit of a good or service, often discussed in the context of marginal analysis.

Socially Optimal

A state or outcome of an economic or social process that maximizes societal welfare, taking into account all costs and benefits to society.