While in Shanghai, China, to teach an MBA course, Craig Richardson, an economics professor from Winston- Salem State University, asked his American students to haggle with sellers in a market where prices for the same items can vary widely. Professor Richardson explained that the same item with the same sticker price at different market stalls can have a final price that varies "by 1,500% or more, depending on the negotiating skills of the buyer."
a. Do Shanghai merchants practice price discrimination? Briefly explain.
b. Which consumers are likely to pay the highest prices for similar items in the Shanghai market?