Discussion Activity by Eco2 1

1. Real world examples of price discrimination:

1. Coupons

-Coupons are one of the examples of price discrimination. Oftentimes, in our place these things can be
very evident on fast food chains like Jollibee, Chowking and Mc Donalds in which these fast foods will offer
deal conditions for you to get these coupons which you can redeem for food or delivery discounts and even
for freebies.

Example:

 Jollibee Deal Conditions: Jollibee presents amazing chance to earn eCoupon on your purchases.

Purchase anywhere using BPI credit cards and get eCoupons for amazing deals.

 Mc Donalds’ “Enjoy your bonus coupon”: Free medium fries when you buy a medium or large coca-cola
or other soft drinks.

 Chowking coupon giveaway in which they would ask you to screenshot the picture of the coupon in
their facebook account and you will present it at any of their restaurants to get sulit Pork Chao Fan
deals.

2. Age Discounts

-A popular way to segment the market is by age category. Through age segmentation, firms even
individuals can now easily position and market their products and services which also includes them applying
price discrimination since it is a selling strategy. Different age groups generally have different elasticities of
demand especially the students who tend to have lower income than working adults and so they are more
sensitive to changes in price. Presented below are some of the real world examples of age discounts.

 Discounts for public transportation in which students enjoy lower fare in jeepneys, buses and tricycles.

 Oftentimes, students would enjoy discounts upon buying laptops and other techs especially if it is back
to school season. An example for this is Apple in which it offers a 6,000 off on a Mac or ipad purchase
which is intended only for the students if bought on any Apple Authorized Education Reseller
nationwide.

 Senior Citizens who are at least 60 years also belongs in the age group that enjoys a variety of
discounts from groceries, restaurants and many more.

3. Loyalty Cards

-Some firms offer rewards to regular customers and this can be done through loyalty cards. A loyalty
program is a marketing strategy designed to encourage customers to continue to shop at or use the services of
a business associated with the program. It allows the customer to enjoy exclusive discounts and other promos
from the firm.

Example:

 Loyalty Card from SM, Watsons, Gaisano, Puregold, Robinsons and many more.

4. Occupational Discount

- Price discrimination is present when individuals receive certain discounts based on their occupation.
An example is when active military members receive discounts.

5. Airline travel and time of departure

 - Travel industries are also one of the many entities who are applying price discrimination like airlines
who charge different prices depending on the season and even the day of the week. For instance during the
peak holiday season, tickets will be higher because there is greater demands.  Moreover, if you happen to
book a flight before peak seasons, ticket prices will be lower.
According to a FareCompare study, below are the most ideal to book a flight in Cebu Pacific Airlines:
 Best Time to Book Flights: Tuesdays at 3 p.m.
 The cheapest days to fly are Tuesday, Wednesday and Saturday for domestic travels.
 The cheapest flight is typically the first flight of the morning.

Examples of a Natural Monopoly:

1. Moelci Electrive Cooperative (MOELCI) - who is the only electric company that supplies electricity in the
whole province of Misamis Occidental.

2. Tangub City Water District (TWDC) - the only water provider within Tangub City.

3. Mediacorp Pte. Ltd - is Singapore's media and entertainment group that serves as the national public
broadcaster for both radio and television in the country. It is considered as a monopoly on the free-to-air
television broadcasting in Singapore.

4. Gege Cinema - The only silverscreen cinema in Ozamiz City.

5. Supermix Unlisugba - The only Korean restaurant grill in Ozamiz City

2. Why and how is the economic profit of monopolistically competitive firms reduced to
PhP0.00 in the long-run?

Since monopolistic competitive market structure is both a combination of monopoly and perfect
competition, then this market structure has some market power and low entry barriers. In the long run of a
monopolistically competitive firm the economic profit will fall to zero because of the low barriers that allow
the entry of new firms which will stimulate the tight competition as consumers will choose to buy slightly
differentiated products at other alternative companies. So basically, this started in the short-run operations of
the original firm, where new producers become attracted to the positive economic profit (profit above normal
profit) generated from the firm’s operations which would lead new firms to enter into the market. When this
happens, supply of slightly differentiated products will rise. And a rise in supply would mean an effect of the
products’ demand of the original firm as it slowly moves to the left implying a decrease. As the consumers of
the original firm transfers buying from other alternative companies, the demand will continue to move left
until it is equal to the average cost or if graph, until it is tangential to the average total cost (ATC) at a quantity
where marginal cost = marginal revenue or in short at the profit maximizing level of output. As a result, the
company will generate zero economic profit where they are just generating normal profits unlike the high
profits they had in the short run. Therefore, a monopolistically competitive firms, will generate positive
economic profit in the short run but will eventually fall to zero economic profit in the long run as new firms
enters into the market.

3. Real world examples of companies that fall under oligopoly structure:

Automobile Manufacturers:

 Toyota
 Ford
 Honda
 Nissan
 Mitsubishi

Cell phone Service Providers:

 Globe
 Smart
 Verizon
 AT&T
 T-Mobile

Electronic/Gadgets
 Apple
 Samsung
 Huawei

Other Examples:
 Coca-Cola- soft drinks
 Pepsi- soft drinks
 Cignal- cable television