Economics In a bygone day, airlines issued discount tickets to students who would be willing to fly on a particular day,with no notice, at a discounted price, one needed to show proof of being of student. The students would have to fly "standby", if and only if there was an available seat, only on that day. Students were able to obtain these tickets, make fictitious reservations, cancel the reservations at the last minute, and secure a seat on the flight at a discounted price. Answer the following questions. a Is this a form of price discrimination? Why? Include in your analysis differing levels of elasticity, if relevant, and any other feature b. Why would an airline use this practice? Provide a dollar and cents example. The airlines caught up with this scheme and ended it. What principal of price discrimination did the students violate so as to end it?

Economics In a bygone day, airlines issued discount tickets to students who would be willing to fly on a particular day,with no notice, at a discounted price, one needed to show proof of being of student. The students would have to fly "standby", if and only if there was an available seat, only on that day. Students were able to obtain these tickets, make fictitious reservations, cancel the reservations at the last minute, and secure a seat on the flight at a discounted price. Answer the following questions. a Is this a form of price discrimination? Why? Include in your analysis differing levels of elasticity, if relevant, and any other feature b. Why would an airline use this practice? Provide a dollar and cents example. The airlines caught up with this scheme and ended it. What principal of price discrimination did the students violate so as to end it?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter21: Getting Employees To Work In The Firm’s Best Interests

Section: Chapter Questions

Problem 21.2IP

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