ECO100Y1 Lecture 12: 12-2
Document Summary
Online sellers: use software that identifies customer"s level of income (from physical location, past browsing) and preferences (past purchases) to quote price specific to that individual. If user is identified as high income, willing to buy expensive items, then use is quoted a high price, and conversely. This is an attempt of perfect price discrimination. Import duties on foreign-produced cars are higher in canada, so there are fewer substitutes, and elasticity of demand is lower. [if this market were perfectly competitive and in long-run equilibrium, then price difference could ony be due to a difference in costs] The market for hot dog stands is perfectly competitive. Answer: price will remain at . 00 if the representative hot dog stand is earning zero economic profit (i. e. if p = atc) If the representative stand is earning economic profits ( p > atc) then ore firms will enter industry, the market supply curve will shift right, and the price will fall beneath . 00.
