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Pricing strategies are used by firms to increase the profits they receive from consumers, usually by taking some of the consumers surplus (the benefits to
Pricing strategies are used by firms to increase the profits they receive from consumers, usually by taking some of the consumers surplus (the benefits to consumers). However, some consumers do benefit from pricing strategies. For example, a student discount at the movie theater gives students a lower price to see a movie. This means that the theater is charging a higher price (and taking more of the surplus) of those paying general admission.
Answer and explain your thoughts to the following questions regarding this situation:
- If a firm needs this extra revenue to stay open, is it good or bad for the market? Is it wrong?
- If a firm does not need this extra revenue to stay open, is it good or bad for the market? Is it wrong?
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