hw11 - Idalia Marcela Osorio Econ 306 Assignment 11...

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Unformatted text preview: Idalia Marcela Osorio Econ 306 Assignment 11 November 1, 2011 The Washington Metropolitan Area Transit Authority charges a higher fare for a subway ride during rush hour than during other times. Discuss this practice as an example of: a. Price discrimination The Washington Metropolitan Area Transit Authority posses the 3 conditions required to practice price discrimination: Some monopoly power: the WMATA is the only metro rail system in the DC metropolitan area; therefore, there are no other substitutes to ride in train besides driving your own car. Different customers have different demand : the customers that travel during the rush hour have a less elastic demand, they NEED to get to work and most likely riding the metro is the faster way and for some the only way to get to their jobs. On the other hand, the customers that travel during the low peak hours might only ride the metro to get to other places and are not in a rush to get on time to that specific place, for this customers is easy to replace the metro rail service by any other...
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