Question

1. Using graphs describe an appropriate price discrimination policy practice for bus company in X city that only provides service to DC and New York.

Answer 1

Price discrimination is the concept of selling products and services at different prices to different customers to enlarge sales. Companies use price discrimination to gain profits, because it can attract consumers to buy larger quantities of their products.

There are three types of price discrimination. The first type of price discrimination in which involves charging different prices for every product, it is also called perfect price discrimination.

Second type of price discrimination, is the activity of sellig products based on quantity discounts.

Third type of price discrimination in which, different prices are charged to different people for same product.

The Bus company in X city that only provides service to DC and Newyork should use the third degree of price discrimination policy for the benefit for the company because this type of price, discrimination helps company to capture consumer purchases from consumer groups. In this type of price discrimination, the products being sold are the same but specific persons are charged different prices.

Graphs:-