Case Interview Prep

Category - Economics

Prescription drug retailers typically offer lowered prices for seniors in order to keep and maintain their loyalty. What is this practice called?
  1. second degree price discrimination
  2. third degree price discrimination
  3. fourth degree price discrimination
  4. price stickiness
Explanation
Answer: B - This is called third degree price discrimination.

Key Takeaway: When producers and retailers offer different prices on the same goods to different customer segments, this is referred to as third degree price discrimination. Students, seniors, and military personnel may typically find themselves paying different prices for the same goods and services than individuals who are not in those categories.
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