Arnie's Airlines decides to offer different fares to different customers for the same trip.Arnie's price discriminates because Arnie
A) wants to convert consumer surplus to deadweight loss.
B) wants to help some buyers with lower fares.
C) has different costs for the same flight.
D) wants to convert consumer surplus to economic profit.
E) wants to convert producer surplus to consumer surplus.

Question

Quizplus · Accepted Answer

Price discrimination is a strategy used by firms to increase their economic profit by charging different prices to different customers for the same product or service, based on their willingness to pay. This strategy aims to capture more consumer surplus (the difference between what consumers are willing to pay and what they actually pay) and convert it into additional economic profit for the firm. Choices A, B, C, and E do not accurately describe the primary economic rationale behind price discrimination.

Arnie's Airlines Decides to Offer Different Fares to Different Customers