In which of the following markets is one more likely to observe ordinary price discrimination rather than block pricing?
A)buying potatoes at your neighbourhood convenience store
B)banking services
C)the cable TV services
D)the local telephony services

Question

Quizplus · Accepted Answer

Ordinary price discrimination is more likely to occur in markets where there aren't any significant costs associated with either implementing block pricing or separating buyers into discrete groups. In the case of buying potatoes at a neighbourhood convenience store, it is unlikely that there would be substantial costs associated with segmenting buyers or implementing block pricing. Hence, ordinary price discrimination is more likely to occur in this market. On the other hand, banking, cable TV and local telephony services involve higher costs associated with segmentation or implementation of block pricing, and hence there is a greater likelihood of observing block pricing in these markets.

In Which of the Following Markets Is One More Likely