Module 5 Self Reflection and Assessment

In my opinion price discrimination in the form of senior citizen discount or children discounts is a fair pricing policy because with senior citizens most live on a fixed income with their pension or social security so it is a nice thing for companies to give them a discount. Senior citizens might be more enticed to spend their money with that company that gives a senior discount. Like with movie theaters, at prices movie tickets are now a days seniors would rather rent a movie from the library or Redbox but if you give them a senior discount they would be more enticed to go see a new movie at the theater instead of waiting until it came out on DVD for them to rent and the company would attract that market segment that they weren’t previously attracting. Price discrimination can lead to increased profits. Going back to the previous question, price discrimination can lead to increased profits since that company is gaining a segment of the market they weren’t initially reaching. Pollution is a negative externality because if a company chooses to dump polluted materials into a nearby river, the parties downstream would enjoy using the river for recreational or productive activities will bear the external cost of the pollution through reduced enjoyment and productivity of the river so pollution is considered a negative externality. Governments can regulate pollution to the optimal levels by charging companies with a higher level of pollution with a higher pollution emission tax until the company improves their pollution level. The process of internalizing an externality means shifting the burden or costs of the externality through taxes, property rights, tolls and government subsidies. As in the example of pollution in Chapter 16. Instead of placing the burden of the pollution on the people breathing the air, the government can place a monetary tax on pollution. So if a company wants to pollute more, they would have to pay more of a tax. This will help shift the burden or costs of the higher pollution from outside the company to inside the company.