A woman complained to \"Dear Abby\" that a laundry charged $1.25 each to launder

Question

A woman complained to "Dear Abby" that a laundry charged $1.25 each to launder and press her husband's shirts, but for her shirts "the same description, only smaller" the laundry charged $3.50. When asked why, the owner said, "blouses cost more." Abby suggested sending all the shirts in one bundle and enclosing a note saying, "There are no blouses here ---these are all shirts." a. Is the laundry practicing price discrimination, or is there really a $2.25 difference in cost? b. Assuming the laundry is engaging in price discrimination, why do men pay the power price and women the higher? c. Could the laundry continue to separate markets if people followed Abby's advice? What about the policing costs associated with separating the markets?

Explanation / Answer

a) The laundry is practicing price discrimination, There is extra differerence in cost in shirts and blouse, but not to this extend. b) the lower price for shirt and higher price of blouse is generally due to material and design complexity.

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