Which case best represents a case of price discrimination?
A)An insurance company offers discounts to safe drivers.
B)A major airline sells tickets to senior citizens at lower prices than to other passengers.
C)A professional baseball team pays two players with identical batting averages different salaries.
D)A utility company charges less for electricity used during off-peak hours, when it does not have to operate its less-efficient generating plants.

Question

Quizplus · Accepted Answer

Price discrimination occurs when a seller charges different prices to different customers for the same product or service, where the price differences are not due to differences in cost. In choice B, the airline is charging senior citizens less than other passengers for the same service, which is a classic example of price discrimination.

Which Case Best Represents a Case of Price Discrimination