Which of the following is NOT an example of imperfect price discrimination?

• A. A university offering scholarships based on students' financial need
• B. A firm charging each customer their exact willingness to pay
• C. An airline offering discounted fares for advance purchases
• D. A movie theater charging different prices for adults and children

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the concept of price discrimination. Price discrimination occurs when a firm charges different prices to different consumers for the same good or service, based on their willingness or ability to pay, rather than differences in cost.
2. Step 2: Recognize the types of price discrimination. Perfect price discrimination (first-degree) charges each consumer their exact willingness to pay, while imperfect price discrimination includes second-degree (based on quantity or versioning) and third-degree (based on consumer groups or characteristics).
3. Step 3: Analyze each option to identify whether it represents imperfect price discrimination: - Scholarships based on financial need represent third-degree price discrimination because prices vary by consumer group. - Airlines offering discounted fares for advance purchases is second-degree price discrimination, as prices vary by purchase timing. - Movie theaters charging different prices for adults and children is third-degree price discrimination based on consumer groups.
4. Step 4: Identify the option that is NOT imperfect price discrimination. Charging each customer their exact willingness to pay is perfect price discrimination, not imperfect.
5. Step 5: Conclude that the firm charging each customer their exact willingness to pay is the correct answer because it represents perfect price discrimination, which differs from the imperfect price discrimination examples given.