Erin and Deidre, two residents of Ithaca, New York, are planning a trip to Bosto

Question

Erin and Deidre, two residents of Ithaca, New York, are planning a trip to Boston. Erin, the sales manager for a large retailer, has to attend a business meeting. Deidre, a college student on vacation, is planning a leisurely trip to visit friends and relatives. Which of the following statements is true?

Select one:

a. An airline cannot price discriminate because buyers can resell their tickets through the Internet.

b. An airline that price discriminates will charge Deidre a higher price.

c. An airline that price discriminates will charge Erin a higher price.

d. Since there is no difference in the cost of producing air travel, airlines will not charge different prices to Erin and Deidre.

Explanation / Answer

c. An airline that price discriminates will charge Erin a higher price.

As, Erin demand is inelastic and has higher willingness to pay.

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