When Dominant Pizza is willing to sell a pizza to a student who lives on-campus at a lower price than it sells the identical pizza to a student who lives a block away from the campus, the pizza firm is
A)implementing unfair pricing practices.
B)incurring a loss on on-campus sales.
C)eliminating all competition.
D)located close to the campus.
E)practising price discrimination.

Question

Quizplus · Accepted Answer

This is an example of price discrimination, where the pizza firm is charging different prices to different groups of customers based on their willingness to pay. They are able to do this because on-campus students may have less access to other food options, making them more likely to pay a higher price for the convenience of having pizza delivered to them. This allows the pizza firm to maximize their profits by charging a higher price to those who are willing to pay it, while still making sales to those who are not willing to pay the higher price.

When Dominant Pizza Is Willing to Sell a Pizza to a Student