Question

A local pizza parlor located on campus offers a student rate for its pizza lunch special. This is a form of __________. a. predatory pricing and is legal. b. predatory pricing and is illegal. c. bait-and-switch pricing and is legal. d. price discrimination and is illegal. e. price discrimination and is legal.

Answer 1

Answer:

E. Price discrimination and is legal

Explanation:

Price discrimination is a situation whereby an organization decides to sell its commodity at different prices to different customers. Here, the pizza parlour offers student rate for students that's different from the rate offered to other customers that are not students. It is the sales of a particular type of product to different buyers or consumers at different prices. It is legal. It only becomes otherwise (illegal) if it is done on the basis of racial discrimination, religious discrimination and so on.

Answer 2

Answer:

The correct answer is e. price discrimination and is legal.

Explanation:

Price discrimination, also known as price differentiation, occurs in situations where a company sells the same product at different prices, either to the same consumer or to different ones. The study of this strategy occurs naturally in cases of monopolies because they seek to sell additional units to consumers without reducing the price of units that have already been sold in a way that allows them to maximize their profits. There are examples of price discrimination in transport and storage companies. To optimize price discrimination, companies will have to control and prevent resale, and they will also have to differentiate consumers depending on their willingness to pay. Although preventing resale is often not complicated, differentiating consumers is a more complex and expensive process.