Many colleges provide students from low-income families with scholarships, subsi

Question

Many colleges provide students from low-income families with scholarships, subsidized loans, and other programs so that they pay lower tuitions than students from high-income families. Explain why universities behave this way. Universities use scholarships, loans, and other programs to charge low-income students different prices (e g. different tuition) than high-income students to increase profit with O A. nonlinear price discrimination. O B. peak-load pricing O C. group price discrimination. D. two-part pricing. O E. bundling.

Explanation / Answer

In a group price discrimination, different prices are charged for the same goods and services.

Since in the given example, Universities and colleges charge low fees and offer a scholarship to poor students for helping them for the same facility which is provided to students with high-income families. Therefore it is an example of group price discriminations.

Hence it can be said that universities use scholarships, loans and other programmes to charge low-income students different prices than high-income students to increase profit with group price discriminations.

Hence option C is the correct answer.

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