In the Sunday newspaper, there are usually coupons that you can clip a

In the Sunday newspaper, there are usually coupons that you can clip and take to the store to save money on products. Anyone can buy a newspaper, and the value of the coupons easily exceeds the price of the newspaper for most consumers.

Is this an example of price discrimination? Explain.

ANSWER

Yes, it is. Consumers with more time are likely to have a more elastic demand for products, and thus they are willing to clip the coupons (and may not buy except at the lower price). Other consumers with less time won’t deal with the coupons and thus will pay a higher price. This is essentially the same idea as movie matinee pricing.