CAIE A-Level Economics 7.8.3 Price discrimination

CAIE A-Level Economics 7.8.3 Price discrimination
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise recognising price discrimination, its conditions and its effects on firms, consumers and society in market examples.

How this is tested

  • apply conditions: separate markets, different PED and no resale between consumer groups
  • identify first, second or third degree discrimination in airline, bus or retail pricing
  • assess producer gains against consumer surplus, access effects and welfare consequences

Question 7

[Maximum number: 1]

A bus company has a monopoly and specialises in long-distance travel. It initially sells its tickets to customers one month in advance of the journey. As the departure date approaches, the price of a ticket increases.

Which kind of pricing policy does the bus company operate?

A

minimum pricing

B

predatory pricing

C

price discrimination

D

price leadership