If Healthy Bars sells its snack bars in the United States for $3 a bar and for $2 (dollar equivalent)in Mexico, this is an example of______ .

Question

Quizplus · Accepted Answer

This is an example of third-degree price discrimination, where the same product is sold at different prices in different markets, based on the price elasticity of demand. Healthy Bars is charging a higher price in the US, where consumers have a higher willingness to pay, while charging a lower price in Mexico, where consumers have a lower willingness to pay. This enables Healthy Bars to capture more consumer surplus and increase its profits.

If Healthy Bars Sells Its Snack Bars in the United