Often, gas stations only a few miles apart differ in price by as much as $0.10 per gallon. The most likely explanation for this kind of price discrimination is that:
A) consumers in some communities have a more elastic demand for gasoline than do consumers in nearby communities.
B) gasoline purchased at one station is a perfect substitute for gasoline purchased at a station a few miles away.
C) the elasticity of demand is the same in each community.
D) the cost of providing gasoline is the same in each community.

Question

Quizplus · Accepted Answer

Price discrimination occurs when sellers charge different prices to different consumers for the same product. This is often due to differences in price elasticity of demand. If consumers in some communities have a more elastic demand, they are more sensitive to price changes, leading gas stations to adjust prices accordingly.

Often, Gas Stations Only a Few Miles Apart Differ in Price