Marcella spends an hour each week going through the weekly grocery store advertisements and then shops at four or five stores to get the best deals. Her friend Hua Xing shops at the same store each week and never looks at the advertisements. The grocery stores are practicing price discrimination through the _____ method because _____ has a lower reservation price.
A)segmentation; Marcella
B)hurdle; Marcella
C)segmentation; Hua Xing
D)hurdle; Hua Xing

Question

Quizplus · Accepted Answer

The practice described is an example of hurdle pricing, in which a seller makes a deal available only to customers who can clear a certain hurdle, such as spending a certain amount of time or effort. Marcella, who spends an hour each week going through advertisements, has a lower reservation price than Hua Xing, who does not put in any time or effort to find deals. Therefore, the grocery stores are practicing price discrimination through the hurdle method to charge Marcella a lower price than Hua Xing. Segmentation pricing would involve the seller dividing the market into different groups that have different price sensitivities, but this is not evident in the scenario described.

Marcella Spends an Hour Each Week Going Through the Weekly