Question

Activity In small groups, discuss why firms use peak and off-peak pricing strategies, such as airline tickets being far more expensive during school holidays. 

1 How many examples of price discrimination based on time (peak and off-peak) can you come up with?

 2 Do you believe that price discrimination is beneficial? Justify your argument.​

Answer 1

Answer:

Firms use this strategy to maximize profits for a given financial and to cover up for the losses faced in the period with not viable sales. As we know as the demand increases with a limited supply the prices are bound to increase so this is also a reason for price hikes for example: airline tickets are more expensive in travel have months, as the demand is higher so is price.

Example: 1) At the start of the covid pandemic the demand for sanitizers, masks, toilet papers, etc sky rocketed causing the supply demand ratio to bend towards demand, and with low supplies the price increased.