Asked by Diana Muñoz on Jul 07, 2024
Verified
Which of the following product pairs would NOT be good candidates for price discrimination through tying?
A) Razors and razor blades
B) Ink-jet printers and ink cartridges
C) Pencils and paper
D) Cellular telephones and cell phone service
Price Discrimination
A pricing strategy where a seller charges different prices for the same product or service to different customers, not based on costs but on what the seller believes each customer can afford or is willing to pay.
Tying
A marketing strategy where a company requires consumers to buy a secondary product or service together with a primary product.
Razors and Razor Blades
A business model where a main product is sold at a low price to increase sales of a complementary product, which is where the profit is made.
- Appreciate the approaches companies take to improve financial outcomes through strategic pricing of bundled goods and tie-ins.
Verified Answer
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Final Answer :
C
Explanation :
Pencils and paper are often purchased together as a single product, and are unlikely to be price discriminated through tying. The other options are more commonly sold separately, and therefore are good candidates for price discrimination through tying.
Learning Objectives
- Appreciate the approaches companies take to improve financial outcomes through strategic pricing of bundled goods and tie-ins.