1- Is it price discrimination when a professional football team charges, say, $350 per ticket for fifty-yard-line tickets in the lower deck and $100 per ticket for the upper-deck tickets overlooking the end zone? Is your answer the same for first class versus coach seats on an airplane where first-class seats are wider with more leg room and the airline devotes more stewards to first-class passengers?
2- Consider two different ways of beating your competition. One way is to offer your customers lower prices and better service. The other is to get a law passed that raises your competitor’s costs – for example, by imposing special operating requirements on them. Can you see any economic difference between these two methods, assuming that both succeed in keeping your competition out of your way?
3- In Britain, everyone has the right to healthcare provided by the National Health Service, paid for out of tax revenues. Nevertheless, two-thirds of British citizens earning more than $80,000 per year currently purchase private health insurance. Why would these people opt to pay ‘twice” for healthcare services? (Note that in America parents do send their children to private schools K thru 12.)
4- What do we mean when we say that industrial policy leads to inefficient use of resources?
