Which would definitely not be an example of price discrimination?

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BlackTom AI · Accepted Answer

To tackle the question, we first consider what price discrimination means: charging different prices to different consumers or groups for the same good, not based on overall production cost differences, but on willingness or ability to pay.
Option A: 'A doctor charges patients according to their income.' This is a classic form of price discrimination by customer segment (ability to pay), so it could be considered price discrimination.
Option B: 'Universities charge higher tuition fees for international students.' Charging different groups of students different prices based on group identity or status is a common form of price discrimination, even though it may be subject to policy debates.
Option C: 'An electricity company charges less for electricity at off peak times because production costs are lower.' Here the price difference is driven by varying production costs over time, not by who is buying or their willingness to pay. This is typically categorized as price discrimination if the price difference is used to manage demand, but the underlying justification is cost-based pricing rather than discriminatory pricing. Since the question asks for what would definitely not be an example of price discrimination, this option stands out as not fitting the typical consumer-segmentation motivation of price discrimination.
Option D: 'Children pay less to go to the cinema than adults.' A child discount targets a demographic group (age), which is a textbook example of price discrimination, often legally accepted as a child/student discount.
In summary, A and B and D involve charging different prices across consumer groups based on attributes or status, which aligns with price discrimination. C, however, attributes the price difference to production cost differences by time (off-peak) rather than to consumer characteristics, making it a cost-based pricing or peak-demand pricing mechanism rather than a discriminatory price strategy.

Practice for Assessment 2 - No.5

Which would definitely not be an example of price discrimination?

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