A doctor charges two different prices for medical services, and the price level depends on the patients' income such that wealthy patients are charged more than poorer ones. This pricing scheme represents a form of:
A) first-degree price discrimination.
B) second-degree price discrimination.
C) third-degree price discrimination.
D) pricing at each consumer's reservation price.

Question

Quizplus · Accepted Answer

This pricing scheme represents third-degree price discrimination as the price level depends on the patients' income, which is a characteristic that can easily be identified and used for price discrimination. First-degree price discrimination involves charging each individual their maximum willingness to pay, second-degree price discrimination involves charging different prices based on the quantity purchased, and pricing at each consumer's reservation price is not a form of price discrimination but rather a method of maximizing profits.

A Doctor Charges Two Different Prices for Medical Services, and the Price