discussion responses. on price discrimination

discussion responses. on price discrimination. 150 words each.

1. Nathan Mace

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The easiest form of price discrimination that I can think of is the gouging of people that happens around every holiday. Airline tickets can remain the same throughout the year, with a little fluctuation, and then around the holidays, they skyrocket.  This also happens if someone tries to buy a ticket a few days before they fly; the prices are much higher than if they had bought them a couple of weeks or months in advance. “There is no hard and fast rule, but if you buy a ticket several months in advance it tends to be cheaper. If demand for the particular flight is high, then the airline starts putting up the price of that flight. It means that the remaining tickets will only be bought by people willing to pay a higher price (inelastic demand). (Pettinger 2014). The people who make the prices know that if someone is buying a ticket for the next few days, they are probably in a hurry to get somewhere, so they will pay a lot more to buy that ticket to reach their destination. They take advantage of people in this way, knowing that sometimes the people have no choice.

They also do this around the holidays. They know people will be traveling, so they raise the prices much higher than normal, because they know people will buy them. Airlines throughout the world are like this, and everyone knows that it happens. Yet no one does anything about it. I personally think there should be laws against airline price discrimination, to make it easier for people to get places, at a cheaper price.



brannon minor

Price discrimination is based on the elasticity of demand of the supply of the product within market demands. The price elasticity of demand is derived from the responsiveness of the consumers within the market given the change is the quantity of services or products demanded to the price change assuming all other influential factors on demand and remain unchanged (Rittenberg, 2008, p. 112). This form of price discrimination is labeled as third-degree price discrimination because the seller bases prices from the buyers sex, age, location, purchase dates, and time of day. The different groups of people are commonly referred to as buyer groups. Economists estimate the different elasticity’s from young

People (ages 18-30) are higher than those over the age of 30 (Rittenberg, 2008, p. 122). Thus, the buying group composed of a youthful age is likely to be affected by the price elasticity of demand. Firms try to take advantage of price discrimination to aid in selling supply surplus or maximize profit in the travel industry during high demand. In order for price discrimination to occur, the product must be a price maker with a downward sloping demand curve in conjunction with maximizing the elasticity of price on various buying groups. Firms determine the marginal revenue generated per buyer group based on the marginal cost of each price elasticity of demand.

For example, if senior citizens have a higher price of demand due to living on a budget, a movie theater will charge lower prices based on their demand curve and the marginal revenue curve. The point where these curves intersect is defined as marginal revenue equaling marginal cost. This point determines the price seniors are willing to pay for a particular movie during a specific time of day. We have all been subject to price discrimination that we deem unfair. However, businesses calculate each price on the buying group. It seems unfair to the consumer, but as a business strategy, price discrimination is beneficial in obtaining profits in a surplus or high demand economic environment.

I am subject to price discrimination whenever I take my children to the kid’s state fair or carnivals. I always feel like I saved money when I have to pay less for my kids than me. Overall, it is a good business strategy to maximize profits through effective price discrimination.

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