The Opera Theatre sells play tickets for the same play at different prices: a lower price to those who opt for the seats at the back of the theatre and a higher price for those who purchase seats in the front, around the stage. Which of the following statements is true?
A) This is an example of product differentiation not price discrimination.
B) Since the cost of producing the play does not change with the seating configuration, this is evidence of price discrimination based on market segmentation.
C) Charging two different prices is an effective way to avoid an excess demand for play tickets; the higher price lowers quantity demanded to some extent.
D) The theatre practices first degree price discrimination by setting prices based on willingness to pay.

Question

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The Answer of The Opera Theatre sells play tickets for the same play at different prices: a lower price to those who opt for the seats at the back of the theatre and a higher price for those who purchase seats in the front, around the stage. Which of the following statements is true?
A) This is an example of product differentiation not price discrimination.
B) Since the cost of producing the play does not change with the seating configuration, this is evidence of price discrimination based on market segmentation.
C) Charging two different prices is an effective way to avoid an excess demand for play tickets; the higher price lowers quantity demanded to some extent.
D) The theatre practices first degree price discrimination by setting prices based on willingness to pay.

The Opera Theatre Sells Play Tickets for the Same Play