Question

Which of the following is an example of price discrimination? a. An online bookstore charges more for overnight shipping than standard shipping when customers buy books from it. b. Airline tickets are more expensive for first-class seats than for coach. c. Hotel rates for AAA members are lower than for nonmembers. d. All of the above are correct.

Answer 1

Answer:

c) Hotel rates for AAA members are lower than for nonmembers.

Explanation:

In business, the term price discrimination refers to the strategy by which the seller charges a different price for the SAME product because the seller knows that the client will pay that price. The key word of this definition is that the seller is offering the same service/product but at different costs

If we take a look at our options we can see that a) offers a different service (one is overnight shipping and the other is standard), b) also offers a different product (first-class seats vs. coach), finally, c) offers the same product (the same hotel rooms) but non members pay more for the rooms than AAA members.

Thus, the correct answer is c) Hotel rates for AAA members are lower than for nonmembers.