Which of the following is the best example of price discrimination?
A)a cellular telephone company charging lower rates to weekend callers than weekday callers
B)a gas station charging less per gallon to customers who pay cash than customers who use a credit card
C)an auto insurance company charging a higher premium to a seventeen year old boy with a driving record that includes three accidents than the premium charged to a middle-aged driver with a clean driving record
D)a private attorney charging higher fees to clients receiving special services than clients receiving regular services

Question

Quizplus · Accepted Answer

Price discrimination involves charging different prices to different consumers for the same product or service, based on their willingness or ability to pay. Option A, where a cellular telephone company charges different rates based on the day of the week, is an example of price discrimination because it differentiates pricing not based on the cost of the service but on the time of usage, assuming that weekend callers might have a different price sensitivity than weekday callers.

Which of the Following Is the Best Example of Price