If somebody posing as a vacationer were able to purchase large numbers of airline tickets from the airlines and later resell them to business travelers,
A) group price discrimination on the part of airlines would no longer be profitable.
B) group price discrimination on the part of airlines would no longer be profit maximizing.
C) the airlines would respond by raising further the price charged to business flyers.
D) this person would not earn any economic profit.

Question

Quizplus · Accepted Answer

Group price discrimination becomes less profit-maximizing for airlines if arbitrage occurs, where someone buys tickets at a lower price (as a vacationer) and sells them at a higher price to business travelers, undermining the airline's pricing strategy.

If Somebody Posing as a Vacationer Were Able to Purchase