Writing in 1849, Jules Dupuit observed why the rail companies actively made third-class accommodations terrible, including removing the roof from the car and having nonupholstered seats:
"It is not because of the several thousand francs which they would have to spend to cover the third-class wagons or to upholster the benches that a particular railway has uncovered carriages and wooden benches; it would happily sacrifice this for the sake of its popularity. . . It hurts the poor not because it wants them to personally suffer, but to scare the rich."
How does "scaring the rich" illustrate price discrimination?
A) It creates profit opportunities by bundling services.
B) It deters those who are willing to pay more from going to third class.
C) It uses tying to charge more for people who ride the train a lot.
D) It encourages consumers with a low willingness to not travel at all.

Question

Quizplus · Accepted Answer

Scaring the rich by offering terrible accommodations in third-class deters them from choosing that option and instead paying more for better seats. This illustrates price discrimination because the rail company is charging different prices for the same service based on the willingness to pay of different customers.

Writing in 1849, Jules Dupuit Observed Why the Rail Companies