00:02
Part a, in order to obtain a low fare, airline travelers need to spend at least one saturday night away from home.
00:43
When a person buys an airline ticket, the ticket itself contains personal information of the buyer, which means that the arbitrage is not possible.
01:02
An airline typically has two basic sets of customers, tourists and business travelers.
01:07
Since they know that the business travelers can spend more money on a ticket and typically fly on a one -day basis, an airline only gives a low fare option to travelers who spend weekends away from their homes.
01:23
Part b, price for delivery of cement is determined by a buyer's location.
01:49
Since a different price is achieved at different locations, arbitrage is present.
02:01
Additionally, the customers are also segmented by their locations.
02:05
Since the delivery of cement to a buyer is obligatory, the firm practices a form of price discrimination.
02:14
Part c, selling food processors with coupons that can be sent back to the manufacturer for a $10 rebate.
03:02
When a customer buys a product, they are given a coupon that they can send back to the seller and get a discount.
03:08
In order to collect this discount, customers need to fill out some sort of form...