Chapter 11: Problem 10

Each of the following is an example of price discrimination except _____. a) airline "youthfares" b) higher-price movie tickets after 5:00 p.m. and on weekends c) doctors charging more to patients who need lab tests d) A\&P's old grades A, B, and C

Short Answer

Expert verified

Option (d) A&P's old grades A, B, and C is not an example of price discrimination. This is because the pricing is based on the varying quality of the products rather than on different consumer segments with varying levels of willingness to pay.

Step by step solution

Understand Price Discrimination

Price discrimination is a pricing strategy in which businesses charge different prices to different consumers for the same goods or services. This typically occurs when a company has the ability to identify different segments of consumers with different levels of willingness to pay. In this question, we need to determine which, among the given options, is not an example of price discrimination.

Analyze Option A

Airline "youth fares" are considered price discrimination because the airline is charging a lower price to a specific segment of their customers: younger individuals. The company recognizes that young people may have a lower willingness to pay for air travel and tries to attract them with lower prices. So, this is an example of price discrimination.

Analyze Option B

Charging higher prices for movie tickets after 5:00 p.m. and on weekends is another example of price discrimination. In this case, the cinemas are targeting customers with different willingness to pay for their services based on when they are using the service. People who choose to go to the movies during these peak hours are likely more willing to pay higher prices, so the cinema charges more during these times.

Analyze Option C

Doctors charging more to patients who need lab tests can be considered price discrimination because the cost of the service is dependent on the type of service needed. Patients requiring lab tests typically need more extensive treatment, and therefore, have a higher willingness to pay. This scenario is also an example of price discrimination.

Analyze Option D

In the case of A&P's old grades A, B, and C, different grades of products are being offered to consumers at different price points. This is not necessarily price discrimination, as the products themselves are different based on quality, and the pricing is based on the differences in those products instead of identifying different segments of consumers with different willingness to pay.

Conclusion

Based on the analysis of each option, we can conclude that option (d) A&P's old grades A, B, and C is NOT an example of price discrimination among the given options, as the pricing is based on the varying quality of the goods rather than the different levels of willingness to pay of consumers.

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