McDonald’s charges a higher price for a Big Mac in New York City than
McDonald’s charges a higher price for a Big Mac in New York City than it does in a small town in Iowa. Is this an example of third-degree price discrimination? Explain.
What will be an ideal response?
ANSWER
No, or not necessarily. Costs differ between the two markets, because land is more expensive in New York City. Thus the higher price reflects that.
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