How Big Is The Discount? Is This Price Discrimination? Why Or Why Not?

Lora Woodrome
November 12, 2015
Ch. 19 Consumer Choice

1. The New York Times offers discounted pricing plans depending on how one receives the newspaper and whether or not the subscriber is affiliated with a college. Go to www.nytimes.com and click “Subscribe Digital.” Find the price discount given to college students. How big is the discount? Is this price discrimination? Why or why not?
• The New York Times offers many different subscription options that vary in content as well as in price. Among the digital packages that they offer, the most popular choice is the “Digital Access” package which contains access to NYTimes.com, all of the New York Times apps, and access to the full Times Archives all the way from 1851. When originally subscribing

The Digital Access package is offered at a generous discount to students for $1 per week throughout the entirety of their time as students. The discount that students receive allow them to pay $11 less a month then someone who is accessing the same package but who is not a student. Students paying a different fee for a monthly subscription is a very good example of price discrimination, which is selling a product at different prices to different people and profits and sales increasing as a result of that. It would be price discrimination because the New York Times is putting buyers into different categories and those buyers are paying a certain price based on which category they fall in to. In this case it is the “student” or the “non student” categories. The Times also has different pricing options for

Aside from introducing consumer and producer surplus, Marshall also introduced a very important concept in economics, marginal utility. Marginal utility helps economists determine how much of certain items that consumers will buy. Marshall also introduced price elasticity of demand, which quantifies a buyer’s sensitivity to a price. The “law of increasing returns” and “the law of diminishing returns” are also credited to Marshall. The law of diminishing returns means that as investment is increased in a certain area, the rate of profit from that investment can’t continue to rise if other variables remain constant. As investment continues, the return diminishes. It is a concept used widely amongst farming, production, and manufacturing. The law of increasing returns is when the units of variable factors are increased with the units of other fixed factors, the marginal productivity increases. The law of increasing returns vastly applies to manufacturing