2. Which of the following are cases of price discrimination and which are not? In the cases of price discrimination, identify the consumers with high and those with low price elasticity of demand.
Damaged merchandise is marked down.
This is not a case of price discrimination because all consumers, regardless of their price elasticities of demand, value the damaged merchandise less than undamaged merchandise. So the price must be lowered to sell the merchandise.
Restaurants have senior citizen discounts.
This is a case of price discrimination. Senior citizens have a higher price elasticity of demand for restaurant meals (their demand for restaurant meals is more responsive to price changes) than other patrons. Restaurants lower the price to high-elasticity consumers (senior citizens). Consumers with low price elasticity of demand will pay the full price.
Food manufacturers place discount coupons for their merchandise in newspapers.
This is a case of price discrimination. Consumers with a high price elasticity of demand will pay a lower price by collecting and using discount coupons. Consumers with a low price elasticity of demand will not use coupons.
Airline tickets cost more during the summer peak flying season.
This is not a case of price discrimination; it is simply a case of supply and demand.