Question

Many bars close to campuses have started offering cheaper beer to consumers with a student IDs. These bars are using a. ​Direct price discrimination b. ​Indirect price discrimination c. ​Decreasing returns to scale d. ​None of the above

Answer 1

The correct answer is letter "A": ​Direct price discrimination .

Step-by-step explanation:

Price discrimination refers to setting the same product or service at different prices because of a special feature of customers such as age, gender, income, location, just to mention a few. Price discrimination always carries an excuse so the offering of products at prices can be considered legal.

Direct price discrimination is provided when a different price is provided to a specific group benefiting individuals who may need the reduction of price the most. Direct price discrimination is given according to the identity of the consumer.

Therefore, if a bar offers discounts to college students showing their IDs, they will be implementing direct price discrimination.