Question

Consider a case of possible price discrimination - lunch specials at restaurants. Some restaurants may offer a soup and salad for $5 during lunch hours and offer the same dish for $8 during dinner hours. Let's suppose that the soup and salad is the cheapest dinner option, and that the restaurant, while usually only half-full during lunch hours, is often full enough during dinner hours that people end up choosing to eat elsewhere because of the wait. In what way might this difference in prices not be price discrimination? People that come in and order the soup and salad for dinner might cause customers who would have ordered a more expensive meal to instead eat elsewhere because of the wait. As such, the marginal costs of the two meals to the restaurant are different, and thus this isn't necessarily price discrimination. The restaurant does not have its servers trying to identify the elasticity of the individual demand curves of its customers and then charging different prices, and so this is not price discrimination. Since different customers pay different prices for an otherwise identical meal, this must be price discrimination. People might be willing to pay more for soup and salad during dinner hours, and so the restaurants are not price discriminating since they are simply charging a higher price to people that are willing to pay the higher price. People often pay more for dinner than they do for lunch. If the price of a soup and salad during lunch relative to the average lunch price is the same as the price of a soup and salad during dinner relative to the average dinner price, then the restaurant is not price discriminating since the relative prices are equal.

Answer 1

Price variations for the same dish at different times may not be price discrimination if cost differences exist, such as higher demand during dinner hours. Different price sensitivities and strategic pricing to manage resources and demand could explain these variations without constituting discrimination.

Step-by-step explanation:

Understanding Price Discrimination in Restaurants

Price discrimination occurs when different prices are charged for an identical product or service absent differences in cost. In the scenario provided, restaurants are offering a soup and salad combo at different prices during lunch and dinner hours. This pricing strategy may not be considered price discrimination if the marginal costs of serving the meal differ between the two time periods. As the restaurant experiences higher demand and potential crowding during dinner, every seat taken by a customer ordering the cheaper meal could potentially displace a customer willing to pay for a more expensive dish. Additionally, different time periods can lead to different price sensitivities among customers, with dinner customers perhaps willing to pay more for the same meal.

On the flip side, differentiating prices based on the time of day could be attributed to demand variations, where prices are higher when demand is greater and the restaurant is more likely to be full. This price change could reflect a blend of cost-based pricing and market-oriented pricing strategies, not necessarily discriminatory practices. Furthermore, menu costs may prevent frequent price changes; hence, price variations by time of day help manage both customer expectations and restaurant resources efficiently. Restaurants adjusting prices seasonally or based on time of day could be responding to standard supply and demand principles rather than engaging in discriminatory pricing.

Answer 2

As I would see it, The eatery doesn't have its servers attempting to distinguish the versatility of the individual interest bends of its clients and afterward charging various costs, thus this isn't value segregation. But also people are ready to pay for the food, causing it not to be price discrimination, which puts in a dilemma.

Explanation:

Initially, Price discrimination is a selling methodology that charges clients various costs for a similar item or administration dependent on what the vender figures they can get the client to consent to.

In unadulterated value segregation, the merchant charges every client the most extreme value the person will pay. In increasingly normal types of cost segregation, the dealer places clients in bunches dependent on specific traits and charges each gathering an alternate cost.

Since various clients follow through on various costs for a generally indistinguishable feast, this must be value segregation. Individuals may be happy to pay more for soup and serving of mixed greens during supper hours, thus the cafés are not cost separating since they are just charging a more significant expense to individuals that are eager to address the greater expense.

Individuals frequently pay more for supper than they accomplish for lunch. On the off chance that the cost of a soup and serving of mixed greens during lunch comparative with the normal lunch cost is equivalent to the cost of a soup and plate of mixed greens during supper comparative with the normal supper value, at that point the café isn't cost separating since the relative costs are equivalent .