Question

Give three examples of price discrimination. In each case explain why the monopolist chooses to follow this business strategy.

Answer 1

Ans. 1

Amusement Park Tickets

You will see that amusement parks charges a lesser fee for children and for senior citizens .

This happens because amusement parks have certain monopoly power over that area and the willingness to pay by the children and old people are low. So because of this price discrimination , amusement parks are able to enjoy higher profits.

Airline Prices

Like airline charging more for urgent travellers than who want a late date tickets,

This happens because , there is a higher willingness to pay for the urgent traveller because he needs to buy that ticket sooner than later because it might be for some urgent work or for emergency and the other traveller will have low willingness to pay as he can choose a lower price ticket for a later date. Most of the Airlines boost the prices up , when you are looking for same day tickets.

Movie Tickets

It is same as the amusement park tickets, as they charge less for childn's and elder's. because of the same reasons as given above in the amusement park.

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