Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A software company offers a student discount on its products.
B
A grocery store marks up the prices of organic produce.
C
An airline charges different prices for the same flight based on the time of booking.
D
A movie theater increases ticket prices during weekends.
Understanding the Answer
Let's break down why this is correct
Answer
Effective price discrimination happens when a company charges different prices to different customers for the same product based on their willingness to pay. For example, a movie theater might offer discounted tickets to students and seniors while charging full price to adults. This allows the theater to attract more customers who might not attend at higher prices, increasing overall sales. By doing this, the theater maximizes its revenue because it captures more of the consumer surplus, which is the difference between what customers are willing to pay and what they actually pay. Therefore, the scenario of the movie theater offering different ticket prices is a clear example of effective price discrimination in action.
Detailed Explanation
Airlines often change prices based on when you buy your ticket. Other options are incorrect because Offering a student discount seems fair, but it targets a specific group; Marking up organic produce is not price discrimination.
Key Concepts
conditions for price discrimination to be effective
examples of price discrimination in real markets
Topic
Understanding Price Discrimination
Difficulty
medium level question
Cognitive Level
understand
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