Ricky and Anita Are 10 Year-Olds Who Have a Lemonade

question 80

Multiple Choice

Ricky and Anita are 10 year-olds who have a lemonade stand on a busy beach and would like to practice price discrimination. They know that they are the only sellers of lemonade on the beach and that adults have a less elastic demand for lemonade than kids so they decide to sell their lemonade for $0.25 to kids and $0.50 to adults. Will their price discrimination be successful? Why or why not?

• A) Yes, they have all of the necessary criteria to successfully price discriminate.
• B) Yes, the only necessary conditions is that they know the relative elasticities of the market segments.
• C) No, the kids who buy their lemonade can practice arbitrage.
• D) No, Ricky and Anita are price takers.

---

Definitions:

Express

To convey a thought or feeling in words or by gestures and conduct.

Social Dominance Orientation

A personality trait that predisposes individuals to prefer and support social hierarchy and dominance of their in-group over out-groups.

Social Comparison

The process of evaluating oneself in relation to others, often in terms of abilities, achievements, and status.

Social Order

A societal concept that implies a set of linked social structures, practices, and institutions which collectively ensure and maintain stability and predictability.