Acc400

“Peak pricing is unfair. It makes goods and services available only to the wealthy and prices the average person out of the market.”

Instructions

a. Comment on the extent to which you agree or disagree with the preceding statement.

b. What is the alternative to peak pricing?

c. Explain how peak pricing might be applied by:

1. A hotel in Palm Springs, California. (Palm Springs is a winter resort in southern California with wonderful golf facilities. In the summer months, however, temperatures are well over 100 degrees and the tourist business slows dramatically.)

2. Movie theaters.

d. Both in general terms and using specific examples, describe the conditions (if any) under which you might regard peak pricing as unethical.

SOLUTION

|a. |The statement is not valid because it addresses only the peak-period aspect of a peak-pricing strategy. It is true that during |

| |the peak period, some customers will be priced out of the market (or at least encouraged to purchase in an off-peak period). But|

| |in off-peak periods, prices tend to be lower than they would under a single-price strategy. Thus, peak pricing may, in fact, |

| |allow some customers to purchase goods or services that they otherwise could not afford. |

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