Hotels routinely increase the prices they charge for rooms on weekends when large numbers of tourists are in town.It is not uncommon for a hotel room that normally costs $149 to cost as much as $649 during the Grey Cup, or the Stanley Cup.Which of the following statements is true?
A)The hotels are practicing first-degree price discrimination by charging what the market will bear.
B)This is evidence of third-degree price discrimination because hotel accommodation on a particular day is not a product that can be resold later.
C)There is no evidence of price discrimination; the hotels are responding to increased demand for hotel rooms in the face of constant supply.
D)The hotels have adopted this pricing strategy to capitalize on arbitrage profits.

Question

Quizplus · Accepted Answer

The hotels are responding to increased demand for hotel rooms during events like the Grey Cup or Stanley Cup, which leads to higher prices due to the constant supply of rooms. This is not price discrimination but rather a market response to demand fluctuations.

Hotels Routinely Increase the Prices They Charge for Rooms on Weekends