Question

The WaveHouse on Mission Beach in San Diego features the Bruticus Maximus, a ten foot wave, which tests the skills of even the most talented surf and wake board riders on the planet. WaveHouse is the only place in San Diego where this service is offered. You can ride B. Max for $40 for the first hour, $33 for the second hour, and $26 for the third hour. Charging a different price for subsequent hours is a form of:

Answer 1

Options:

A) monopoly regulation.

B) price discrimination among units of a good.

C) rent seeking behavior.

D) price discrimination among groups of buyers.

Answer:

B) price discrimination among units of a good.

Explanation:

By charging a different price for subsequent hours The WaveHouse would be discriminating their price on the basis of hours spent by buyers.

Remember, there may exist customers who usually spend lesser amount of hours on such activities; so they may ride for lesser hours, which means they are discriminated against in terms of the price paid for the service. Thus, the units of a good or service bought as in this case determines the price of the service.