Managerial Economics

A couple of years ago my wife and I went on a seven day cruise. While there were many activities to be a part of while on the boat when we go off the boat to take part on some of the activities in the different islands we witness price discrimination. We had already spent a lot of money on the cruise itself so we were trying to spend our remaining sending money wisely. There were different types of excursions advertised prior to coming on shore. My wife and I purchased one that was going to take us sightseeing throughout the island. I don’t recall the exact price but what I do recall is that it was less expensive if you purchased the tickets on board than if you purchased them after you disembarked. The tour was the same for both types of paying customers, heck we sat next to customers that I saw payed a higher ticket price than my prepaid price. The tour guides knew they could charge a higher price on land because tourist were not going to spend valuable vacation time to go back to the boat to save a couple of dollars on tour tickets. They also knew that those overpriced tickets were not going to be resold for a different price to other customers. Most people that go on cruises take different cruises to different destination they do not just keep going to one destinations several times. The tour companies know that vacationers are going to be willing to pay for these services because that might be the only time these vacationers visit that island. Business firms operating in competitive markets are not restricted to charging only one price for their product. These firms may find that by charging different customers different prices for a common product may actually increase the profits of the firm” (Ruby, 2003). Price discrimination is illegal if it is done on the basis of race, religion, gender, and other factors but the price differences for these tour ticket was not illegal.

Ruby, D. (2003). Price Discrimination, Retrieved from http://www.digitaleconomist.org/pd_4010.html

Need 300 word reply to this over price Discrimination. Please use the reading material I provide as a price.

APA format and intext citation please.

 
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