Dmitri and Juanita are debating the use of coupons by grocery stores. Dmitri say

Question

Dmitri and Juanita are debating the use of coupons by grocery stores. Dmitri says, “The use of coupons in grocery stores represents a means of price discrimination. It's pure and simple. Coupons do reduce the price of groceries, but mostly to people who are less likely to buy at the full price.” By contrast, Juanita contends, “Coupons do not constitute price discrimination. They simply represent a way of temporarily changing the prices of some grocery items. Coupons reduce the price for everyone, not just for those who are price sensitive.” Economists generally agree with _____(Juanita/ Dmitri)

Explanation / Answer

ECONOMISTS GENERALLY AGREE WITH DMITRI. PRICE DISCRIMINATION IS THE PRACTICE OF OFFERING DIFFERENT PRICES TO DIFFERENT CUSTOMERS. THUS COUPONS ARE A WAY TO GIVE REBATES TO THE CUSTOMERS.

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