Price Discrimination. Metropolitan bus service companies in the United States have charged lower fares to senior citizens in an effort to profitably segment the market for their services. Thus, senior citizens have come to enjoy discounts of 25-50% off the prices paid by other (younger) full-price customers. This two-tier pricing scheme has raised the ire of some consumers who view it as discriminatory and a violation of antitrust laws.
A. Is this pricing scheme discriminatory in the economic sense? What conditions would be necessary for it to be profitable to the bus service industry?
B. Carefully describe how price discrimination could violate U.S. antitrust laws and be sure to mention which laws in particular might be violated.

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The Answer of Price Discrimination. Metropolitan bus service companies in the United States have charged lower fares to senior citizens in an effort to profitably segment the market for their services. Thus, senior citizens have come to enjoy discounts of 25-50% off the prices paid by other (younger) full-price customers. This two-tier pricing scheme has raised the ire of some consumers who view it as discriminatory and a violation of antitrust laws.
A. Is this pricing scheme discriminatory in the economic sense? What conditions would be necessary for it to be profitable to the bus service industry?
B. Carefully describe how price discrimination could violate U.S. antitrust laws and be sure to mention which laws in particular might be violated.