Question

Sam, a third-grader, really likes to look for interesting bugs with other people during recess. Each of Sam's friends offers to look for bugs with Sam in exchange for him playing a game that he or she likes. Bill wants to play King of the Mountain, Suzie wants to play Hopscotch, and Johnny wants to play Slaps. Sam normally likes playing with each of his friends equally. Sam offers to trade one day of King of the Mountain with Bill for one day of looking for bugs. Sam does not like to play Hopscotch, so he offers to trade Suzie one day of Hopscotch for two days of looking for bugs. Sam knows that Johnny really likes playing Slaps so, although Sam likes playing Slaps and King of the Mountain equally, he offers to trade Johnny one day of Slaps for two days of looking for bugs. Is sam's offer to suzzie price discrimination? Is sam's offer to Johnny Price discrimination?

Answer 1

Answer: 1. No.

2. Yes.

Explanation:

Price Discrimination is a pricing strategy where suppliers/producers or sellers sell a good to different people at different prices depending largely on their preference and/or capacity to pay for the commodity i.e, if you want it more, you are charged more.

1. Johnny did not like to play Hopscotch, so offering Suzie one day of Hopscotch for two days of bug hunting is fair and no price discrimination occured as he did not offer these terms to someone else who's game he did not like.

2. Sam knew that Johnny really liked playing Slaps so he leveraged on that and offered him more expensive terms so to speak than he did to Bill even though he liked playing the both games equally. This means that he charged Johnny more than Bill simply because Johnny liked and preferred his game alot which is Price discrimination.