Discriminating The Rich?

1) What are the different types of price discrimination? Age and Racial discrimination as well as financial status discrimination. These are the probably two most common, discriminating people by their age and race is pretty self explanatory, as well as financial status discrimination.

2) In the cases in the articles above, what type of price discrimination is being used? The cases in the articles I have read have shown financial discrimination as well as racial discrimination. The example with American universities shows how the universities discriminate on the amount of money the parents of the student make, and all the examples about tourism showed how countries discriminate tourists although they are actually the ones who bring the most money to the country not the locals going to museums. 3) Illustrate this concept on a diagram and explain why a firm would use price discrimination. How will it affect revenue and profits? A picture is worth a thousand words, although are some words needed to explain this graph below. The graph below depicts price discrimination, the top graph shows no price discrimination whereas the lower graph shows price discrimination.

4) What are the key conditions needed for price discrimination to take place? In the cases above, why is it that British consumers are charged a higher price? What does this tell us about their price elasticity of demand? British consumers are charged more, actually not only British but all consumers that do not speak russian are charged more just because they can not read a sign that is written in russian. This shows the price elasticity of demand for locals is pretty elastic since there have to be lower prices for locals to visit the places. The examples above show as well that the price elasticity of demand for universities in the states is elastic since the not everyone pays the same price but different depending on their salary. 5) What forms of price discrimination (a) are being practised by US private universities and (b) being proposed in the Browne report for students at English universities? A Financial Status Discrimination. B Browne is proposing to have stable prices of British universities no matter how much one earns or their financial position. 6) What other examples of price discrimination can you think of? Try and think of examples that fit into the different types of price discrimination. Other examples of price discrimination are found all over the place. One that comes to my head instantly is for example income tax, the more you earn the more you have to give away. Another example could be the cinema, in the cinema people receive discount if they are under a certain age or over, this does not cost the cinema any more money if someone is over age or under, although in our society it is understood that minors and seniors receive special bonuses and helps.

What do you think? Erlach