An upscale fusion bistro in a small town charges higher prices for the same menu items at dinner time than at lunch time. Does the bistro necessarily practice price discrimination?
Explain your answer
The bistro practices price discrimination if it charges customers at dinner time more than those at lunch time and there is no cost difference. However, the costs for customers at dinner time are typically higher than the costs for customers at lunch time because customers at dinner time tend to stay longer and therefore consume more services. The higher prices at dinner time may well reflect the higher operating costs for the same menu items.
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