Question

Dry cleaning companies often charge more for women's blouses than men's shirts. They claim that this is because women's blouses require more effort. However, there are many that question this claim. In Miami-Dade County, charging different prices for this service is not allowed. This practice of charging women more than men for the same service is known as _______. a. price discrimination b. price fixing c. transfer pricing

Answer 1

Answer:

Option (a) is correct.

Explanation:

This is a case of third degree price discrimination.

There are three types of price discrimination are as follows:

(a) First degree price discrimination

(b) Second degree price discrimination

(c) Third degree price discrimination

In a third degree price discrimination, a company or a firm can charge different prices for different groups of people but charge the same price within the group.

In our case, Dry cleaning companies charge more prices from the women than from the men but they can charge the same price from all the women.