Question

A burger establishment such as whataburger sells a burger for $10 but two burgers for $15. Could this reflect difference in costs? Discuss the conditions under which this could be a type of price discrimination. Why might the restaurant require that each person purchase a meal?

Answer 1

Price discrimination is a marketing strategy used for selling same goods and service to different consumer at different price.There are three degree of price discrimination.first degree discrimantion company charge maximum possible price for each unit consumed.second degree discrimination means providing discount for goods produced in bulk.third degree discrimination means charging different price for different product.

Here burger establishment sells single burger for $ 10 and two burgers for $ 15.hence this is second degree price discrimination.when a product is purchased at bulk then per unit of its variable cost is decreases.Here two burger are purchased hence variable cost of purchasing 2 unit is decreases.here we can see customer get benefit of 5 rs by purchasing 2 units of berger.Seller is also get profit because due to this discount customer want to buy more quantity of goods.Hence sales increases due to second degree price discrimination.

this is second degree price discrimination and this is used when bulk quantity of goods is purchased by customer.

Restaurant makes meals at a bulk .they made food on the basis of estimatation of people hence if each customer can purchase the meal then they get higher profit and their variable cost of making food is also goes down.As we know resturant have high fixed cost and they have to pay that cost even no meal is maked by the them.Hence for setting their fixed cost they want to sale all meal to the customer.