Question 1: A bar I used to go to when I lived in Okoboji, Iowa (a tourist town)

Question

Question 1: A bar I used to go to when I lived in Okoboji, Iowa (a tourist town) would increase cover charge on the 4th of july by two hour increments. The cheapest cover charge occured early in the day, the highest cover charge ($30!) was charged between 9pm and 12am. This is an example of:

multiple choice:

a) Peak load pricing

b) illegal price discrimination

c) price discrimination

d) collusion

Question 2:

Matinee movies and popcorn specials are an example of:

multiple choice

a) 1st degree price discrimination

b) 2nd degree price discrimination

c) price discrimination

d) a tying arrangement

a) Peak load pricing

b) illegal price discrimination

c) price discrimination

d) collusion

Question 2:

Matinee movies and popcorn specials are an example of:

multiple choice

a) 1st degree price discrimination

b) 2nd degree price discrimination

c) price discrimination

d) a tying arrangement

Explanation / Answer

1. A bar I used to go to when I lived in Okoboji, Iowa (a tourist town) would increase cover charge on the 4th of july by two hour increments. The cheapest cover charge occured early in the day, the highest cover charge ($30!) was charged between 9pm and 12am. This is an example of:

Solution: Price discrimination

Explanation: Price discrimination is the practice of charging different prices from different persons for the same goods or services

2. Matinee movies and popcorn specials are an example of:

Solution: 3rd degree price discrimination

Explanation: Matinee movies and popcorn specials, Movies charge different prices makes it a separate markets and customer groups, thus it belongs to 3rd degree price discrimination

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