When a utility charges homeowners less than big industrial users,it is practicing:
A) first-degree price discrimination.
B) fourth-degree price discrimination.
C) third-degree price discrimination.
D) markup pricing.
E) tying.

Question

Quizplus · Accepted Answer

This is an example of third-degree price discrimination, where the utility company charges different prices to different groups of consumers based on their willingness to pay. In this case, homeowners are assumed to have a lower willingness to pay than big industrial users, so they are charged a lower price.

When a Utility Charges Homeowners Less Than Big Industrial Users,it