Anonymous
Anonymous asked in Social ScienceEconomics · 9 years ago

Economics Homework Help?

Hi, I have read the textbook, but I'm not sure about these questions. I understand the concept of price discrimination (charging different rates to different people despite no differences in cost in production).

Can anyone explain how and why a company would price discriminate in these circumstances:

1.) fast food industry with business and retired customers

2.) a movie theater with big families vs singles/couples

Thanks!

1 Answer

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  • Anonymous
    9 years ago
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    1. the demand for fast foods of business customers is inelastic,while of retired customers is elastic. Business customers have not so much time for lunch, and have not so much health concern. But retired customers have more substitutes. They have more time and health concern. The price will be set higher in the market for business customers, while lower for the retired ones. It will increase total income of the two markets.

    2. The demand for a movie theater with big families is inelastic. They have children, and have less substitute, while of single and couples is elastic. Substitutes are more available. The price will be set higher for big family, and lower for single and couples.

    Source(s): Anjaree
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