Answer to Question #274092 in Microeconomics for Zara

Question

A firm charges different prices to two groups. Would the firm ever operate where it was suffering a loss from its sales to the low-price group? Explain.

Answer 1

Yes, if the firm charges different prices for two different groups, it can operate in a market, where it suffers losses by charging a low price. However, it can recover the losses due to the

lower-price group, only when the price for higher-end customers.Definatey it is possible for a firm to operate if it was suffering a loss from its sales to the low-price group.It can makeup the loss suffered from the profit incurred from the higher-price groups.