One Example of Price Discrimination Occurs in the Airline Industry

question 43

Essay

One example of price discrimination occurs in the airline industry as airlines typically set a high price for business people and a low price for vacationers. Use this example to demonstrate and graphically illustrate the rationale of airlines' price-discrimination pricing strategy.

Understand the distinctions among private goods, public goods, common resources, and artificially scarce goods based on their characteristics of excludability and rivalry in consumption.

Identify examples of private goods, public goods, common resources, and artificially scarce goods.

Explain the free-rider problem and how it influences the provision of public goods.

Recognize the inefficiencies in resource allocation associated with common resources and public goods.

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Definitions:

Retrolental Fibroplasia

A condition characterized by the abnormal development of fibrous tissue behind the lens of the eye, potentially leading to blindness; common in premature infants who have been exposed to high levels of oxygen.

Retinal Blood Vessels

The network of arteries and veins within the retina that supply blood, nutrients, and oxygen to support its functions.

Scleritis

An inflammatory disease affecting the sclera, the white outer layer of the eye, which can cause severe pain and potentially impair vision.

Trichiasis

A condition where eyelashes grow abnormally and irritate the eyes.