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2
2. (10 points) Indicate what type of price discrimination are the firms applying in the following examples:
a. (2 points) Gas stations are seen to charge different prices for different types of gas regular, plus and supreme.
b. (2 points) Grocery stores sell different sized boxes of cereals at different prices.
c. (2 points) Gillette razors are sold with several blades at a certain price but the blades cost more when bought separately without the razor.
d. (2 points) Calvin Klein offering 20% discount to people who sign up for their newsletter.
e. (2 points) A “buy one get another one 50% off” offer going on at the local clothing store.
Expert Solution
a. This is a thrid degree price discrimination as different prices are charged for different gas regular.
b. This is a second degree price discrimination as for different sized boxes, different prices are charged.
c. This belongs to a two-part tariff system or second degree price discrimination
d. This belongs to a thrid degree price discrimination as members who subscribe to newsletter will get 20% discount.
e. This is a second degree price discrimination.
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