Question

A chocolatier produces truffles and sells each 1 pound box of truffles for $20. However, the chocolatier knows that some consumers would be willing to pay more than the cost of the chocolate, but less than $20 per pound, and wishes to sell truffles to these consumers as well. Which of the following price discrimination methods relies on the chocolatier knowing which types of consumers are likely to have a lower willingness to pay?
a) Offering one free box of truffles to anyone who purchases two boxes
b) Selling misshaped truffles in bulk at a price of $12 per pound
c) Offering a discount to students and seniors
d) Offering a 20% off sale on a single type of truffle each week

Answer 1

Answer:

c) Offering a discount to students and seniors.

Explanation:

Price discrimination involves a supplier selling the same good at different prices to different customers. Price discrimination is usually done to take advantage of consumer surplus.

If the choclatier knows the price group that will pay lower, he can target them and give the option of paying lower.

In this case offering discount to students and seniors shows the choclatier has identified these class of customers as the one that are willing to by chocolates below $20.