A local cinema decides to charge different prices for tickets based on the time of the day. For example, matinee shows are cheaper than evening shows. How does this pricing strategy reflect the concept of price discrimination and its impact on market efficiency?

Price discrimination is when a seller charges different prices to different groups of customers for the same product or service. In the case of the local cinema, they charge less for matinee shows to attract more customers during times when fewer people would normally attend. This strategy allows the cinema to maximize its profits by capturing different levels of willingness to pay. For example, families or students might prefer cheaper daytime tickets, while evening shows may appeal to adults who are willing to pay more. Overall, this pricing approach can lead to greater market efficiency by filling more seats and ensuring that the cinema can cover its costs while providing options for various customer segments.