A movie theater charges different prices for tickets based on age, with children paying less than adults while seniors pay a discounted rate. Which category of price discrimination does this scenario best represent, and why?

This scenario represents third-degree price discrimination, which occurs when a seller charges different prices to different groups of consumers based on their characteristics, such as age. In this case, the movie theater charges children a lower price because they typically have less money to spend and are more sensitive to price changes. Seniors also receive a discount because they may be on fixed incomes and can benefit from lower prices. By offering different prices based on age, the theater can attract a larger audience and maximize its profits. For example, if a child ticket costs $5, an adult ticket costs $10, and a senior ticket costs $7, the theater effectively appeals to each group’s willingness to pay.