Question

Helen runs an Indian takeaway and dine-in restaurant in Toowong. In the evenings, the restaurant is quiet from 5pm - 7pm and very busy after 7pm. When the restaurant is busy Helen must hire additional kitchenhands, waiters and bar staff. To encourage customers to eat earlier when her costs are lower, she introduces 'early bird student specials' between 5pm-7pm and keeps the busier times at the higher price. Which of the following statements are true: Helen is third degree price discriminating. Helen is peak load pricing. If the discount is offered to all customers between 5pm and 7pm, Helen is not price discriminating Charging less between 5pm and 7pm makes no economic sense. Helen should not be offering the discount to students.

Answer 1

Ans) the correct statements are

- Helen is third degree price discriminating.

- Helen is peak load pricing.

Peak load pricing is the strategy of charging higher prices for goods and services when the demand is at peak. Third degree price discrimination involves charging different prices for the same product in segments of the market. The market is divided into segements by time or by geography.