This preview shows page 1. Sign up to view the full content.
Unformatted text preview: same price. EXAMPLES OF PRICE DISCRIMINATION Firms in our economy use various business strategies aimed at charging different prices to different customers. Now that we understand the economics of price dis-crimination, let’s consider some examples. Movie Tickets Many movie theaters charge a lower price for children and senior citizens than for other patrons. This fact is hard to explain in a competitive market. In a competitive market, price equals marginal cost, and the marginal cost of providing a seat for a child or senior citizen is the same as the marginal cost of providing a seat for anyone else. Yet this fact is easily explained if movie theaters have some local monopoly power and if children and senior citizens have a lower “Would it bother you to hear how little I paid for this flight?”...
View Full Document
This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.
- Spring '10