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:

Corollary

A proposition that follows from one already proven, often seen as a natural consequence or result.

Theory

A system of ideas intended to explain something, based on general principles independent of the thing to be explained.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Principle Of Falsifiability

A criterion for scientific inquiry proposed by Karl Popper, stating that for a theory to be considered scientific, it must be able to be proven false.