Amtrak is considering two pricing strategies for its service. One is to price its train tickets so that it is less expensive to travel on weekends than during the week when there is heavy business travel, which illustrates _____ pricing. The second is to price its train tickets so that the further away the travel date, the greater the discount, which is best described as _____.
A) demand-based; secondary market pricing
B) demand-based; differential pricing
C) demand-based; periodic discounting
D) cost-plus; secondary markup
E) cost-plus; periodic discounting

Question

Quizplus · Accepted Answer

The first pricing strategy mentioned, where Amtrak prices its train tickets based on the demand (i.e. weekend vs weekday travel), is an example of demand-based pricing. The second pricing strategy mentioned, where Amtrak prices its train tickets based on the time of travel (i.e. the further away the travel date, the greater the discount), is an example of differential pricing. Therefore, the best choice is B, demand-based; differential pricing.

Amtrak Is Considering Two Pricing Strategies for Its Service