Asked by Sincerely, Belle on Jun 01, 2024

verifed

Verified

Given that the firm offers both the products,what prices can it offer to motivate the two groups to profitably self-sort into buying the correct brand​

A) ​No-name $60;High-end $100
B) No-name $50;High-end $100
C) No-name $50;High-end $90
D) ​No-name $60;High-end $90

Profitably Self-Sort

A situation where consumers or entities voluntarily segregate themselves based on their preferences or profitability criteria, often observed in markets.

No-Name

Products that are sold without a brand name, often at lower prices than their branded counterparts.

High-End

Referring to products or services of superior quality and often higher price, targeted towards a market segment that appreciates or demands luxury and top-tier performance.

  • Ascertain the ideal pricing tactics to increase profit margins.
  • Understand the importance of avoiding arbitrage within pricing discrimination tactics.
verifed

Verified Answer

ZK
Zybrea KnightJun 03, 2024
Final Answer :
C
Explanation :
To motivate self-sorting, the price differential needs to be significant enough. Offering the no-name product at a lower price of $50 makes it an attractive option for budget-conscious consumers, while offering the high-end product at a slightly lower price of $90 still makes it an attractive option for those willing to pay more for quality. This price difference should effectively motivate self-sorting.