Key Concepts: The Perfectly Competitive Firm in the Short Run, The Long Run

Priceline.com
http://tickets.priceline.com/

Review the basic Priceline.com service information under the "How It Works" tab.

• How can Priceline.com offer prices on hotels and airline tickets that are 40% to 50% below the retail prices?
• In what condition, a proposed or asking price for airline tickets is refused by participating airlines (Hint. Break-Even Price)
• Review the Ubid.com service at http://www.ubid.com/cat/get_cat_page.asp?CatID=0&Pg=0 Explain why having "NO RESERVE PRICE" may help to increase "consumer surplus" in the market.
• Explain how new services like http://www.mysimon.com/ bring about more competitive markets.