Sergio sells identical shirts under two brand names - Rags and Bees. The shirts with the Rags label sell for $70, and the shirts with the Bees label sell for $40. The Rags shirts hang wrinkle-free on a hanger, and the Bees shirts are folded and have some wrinkles. This is an example of price discrimination through
A)using an imperfect product to create a hurdle.
B)using shopping around to create a hurdle.
C)assuming that customers are unaware of quality.
D)segmenting into groups based on customer income.

Question

Quizplus · Accepted Answer

Sergio is using an imperfect product (wrinkled shirts) to create a hurdle and differentiate between the two brands, allowing him to charge a higher price for the wrinkle-free Rags shirts.

Sergio Sells Identical Shirts Under Two Brand Names - Rags