The Athenian Theatre Sells Play Tickets for the Same Play

question 156

Multiple Choice

The Athenian Theatre sells play tickets for the same play at different prices: a lower price to those who opt for the seats at the back of the theatre and a higher price for those who purchase seats in the front, around the stage. Which of the following statements is true?

• A) This is an example of product differentiation but not price discrimination.
• B) The theatre practices first-degree price discrimination by setting prices based on willingness to pay.
• C) Since the cost of producing the play does not change with the seating configuration, this is evidence of price discrimination based on market segmentation.
• D) Charging two different prices is an effective way to avoid an excess demand for play tickets; the higher price lowers quantity demanded to some extent.

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Definitions:

Wire Gauge

A measure of the thickness of a wire, often used in determining current capacity or electrical resistance.

Diameter

Straight line extending across the center of a circle from circumference to circumference. The diameter of a circle is two times its radius.

Potential Difference

The difference in electric potential between two points, which drives the flow of electric current in a circuit.