The Athenian Theatre Sells Tickets for the Same Play at Different

question 151

Multiple Choice

The Athenian Theatre sells 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:

Quantity

The amount or number of a material or immaterial good or service.

Tariff

A tax imposed by a government on imported goods, often used to protect domestic industries and adjust trade balances.

Carnations

A species of flowering plant in the Dianthus genus, often used in bouquets and floral arrangements.

Imported

Brought into a country from abroad for sale.