Question

Suppose the local pharmacy charges different prices to senior citizens than it charges to younger customers. The pharmacy should charge the senior citizens less than the younger customers if:

Answer 1

Pharmacies may charge seniors less for prescription drugs due to their higher medication usage, fixed or lower income, and discounts provided by assistance programs like Medicare's discount card program. Pricing strategies are influenced by market dynamics, such as the competitive 'going rate,' which affect how much customers are willing to pay.

Step-by-step explanation:

Understanding the Differential Pricing for Prescription Drugs

Pharmacies may implement differential pricing strategies where senior citizens are charged less than younger customers for prescription drugs. This approach can be justified by various factors. For example, senior citizens often have a fixed or lower income post-retirement and typically require more medications due to age-related health issues. This demographic has shown a higher usage of medication, as indicated by surveys establishing an increase in prescription medication usage locally compared to the national percent. The financial assistance through programs like the Medicare Prescription Drug and Modernization Act of 2003 aims to reduce the cost burden on this vulnerable group by providing a discount card program, offering savings on pharmaceuticals.

Moreover, market dynamics, such as the 'going rate' for drugs, influence pricing strategies. Pharmacies cannot significantly raise prices without risking the loss of customers who would turn to competitors offering more economical options. Hence, offering discounted rates to seniors could be a strategic decision aligned with broader industry practices and aid public health objectives.

Answer 2

third-degree price discrimination

Step-by-step explanation:

Third - degree price discrimination -

It refers to the practice of discrimination , i.e. , unfair treatment , where people tends to ask for different price for the same goods and services , is referred to as third - degree price discrimination.

The discrimination can be on the basis of time , location , age , gender etc.

This type of discrimination is very common observed in the day to day activities .

Hence , from the given scenario of the question,

The correct term is Third - degree price discrimination .