Question

Digiano's pizza buffet charges $15 for adults and $10 for senior citizens. the goal of price discrimination is to increase _____ by charging more to those who have _____ demand.

Answer 1

Pricing discrimination is a strategy in pricing which charges customers with different prices for the same service or product. The seller charges every customer with the maximum price the customer is willing to pay. The seller groups its customers basing on their attributes and characteristics as buyers.

Answer 2

The answer is: consumer surplus; producer surplus

Consumer surplus refers to a situation when the price of products is less than the price that they are willing/capable to pay.

Giving lower price for senior citizens, more old citizens would be willing to come to Digiano due to its cheap price. The thing is, it is very unlikely that the old senior citizens come to Digiano by themselves. They are most likely have to invite their families who can be charged at higher price to cover for the consumer surplus.