|INSTRUCTOR DISCUSSION NOTES:
Move over Barnes & Noble; make room for John Q. Public, Bookseller
1. Suppose you bought E.L. Doctorow’s novel, The March, online for $25.95, and read it the first weekend you bought it. As you consider reselling it online, what is the opportunity cost of selling your book?
The opportunity cost would be the relative value in reading it again. The cost paid for the novel is sunk, and therefore not a relevant marginal cost.
2. What is the advent of used bookselling online doing to elasticity of demand?
Online bookselling is making demand far more elastic, as consumers flock to the cheaper books.
3. Is this a form of price discrimination? Why or why not?
No; what’s happening is that it is becoming more and more difficult for traditional booksellers to price discriminate among their own clientele.
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