Many restaurants offer "early-bird specials" to dinner customers. These specials consist of a significant price reduction on selected menu items purchased before some pre-determined time, e.g., 6 p.m
Is such a practice a form of price discrimination? If so, what type?
"Early-bird specials" are indeed a form of price discrimination; specifically, third-degree price discrimination. In this case, the restaurant is dividing customers into two distinct markets; one consisting of people who prefer to eat dinner earlier and another consisting of people who prefer to dine later in the evening. It is also worth noting that the "early"group generally consists of senior citizens who frequently live on fixed incomes and, as such, are more sensitive to price. It is also routinely observed that senior citizens tend to prefer eating dinner earlier than their younger counterparts.
You might also like to view...
A line that is perfectly elastic has an elasticity of demand of zero.
Answer the following statement true (T) or false (F)
The goal of the Single European Act (or Europe 1992 initiative) is to
A) develop uniform product standards for all EU countries. B) remove nontariff barriers to trade between EU countries. C) deregulate economic activities in transportation and financial services. D) All of the above.
According to the theory of rational expectations, the economy always remains at the natural rate of unemployment, irrespective of policy changes
a. True b. False Indicate whether the statement is true or false
You have just bought a used car and drive away satisfied that you’ve made a good deal on the purchase. What would an economist say about your “gain” on the deal?
A. Your gain has clearly meant that the seller lost on the deal. B. The seller has clearly gained, and you have actually lost on the deal. C. Both you and the seller have gained something. D. If your gain is too large, then the deal should be renegotiated. E. If the seller’s loss is too large, then the deal should be renegotiated.