Question

When a movie theater charges a lower ticket price for senior citizens and/or students, the movie theater is engaging in_________

Answer 1

Answer:

b) third-degree price discrimination.

Explanation:

The price gouging happens on prices when is carried out by the seller, goods, services or goods to a higher level than what is considered acceptable or fair and potentially considered unethically. This usually occurs after a demand or supply shock. Common examples include price increases for basic needs after hurricanes or other natural disasters.

First-degree discrimination (perfect price discrimination) appears when a business charges the maximum possible price for each unit consumed because prices are diverse among some units. In this case, where a company charges a different price for every good or service sold.

Second-degree price discrimination is the concept in which a company charges a different price when there are demands for different quantities consumed, such as quantity discounts on bulk purchases.

Third-degree price discrimination is the case in which a company charges a different price to different consumer groups. This is the type of most common type of price discrimination. If we see in the question there is given distinctive ticket price offers to senior citizens and/or students. That’s why we should choose third-degree price discrimination.