Question

4. Explain whether each of the following practices is price discrimination:

a. Disneyland gives special discounts on admission to residents of Southern California.

b. Ski areas sell season passes to frequent skiers.

c. Grocery stores sell “day old” bakery goods at a lower price than fresh bakery goods

Answer 1

a) Disneyland gives special discounts on admission to residents of Southern California.-this is third degree price discrimination as price Disneyland divides the market geographically and charge different prices from each.

b. Ski areas sell season passes to frequent skiers.-this is second degree price discrimination as company is offering season pass to its frequent customers.

c. Grocery stores sell “day old” bakery goods at a lower price than fresh bakery goods-This is not a price discrimination