Discuss how and why the Toronto Transit Commission practises price discrimination?

Question

Discuss how and why the Toronto Transit Commission practises price discrimination?

Answer 1

Well, price discrimination is when the seller of a service charges different prices to different groups of buyers. The TTC has different fare values for adults, students/senior, and children. If you look at the cash fares for instance, adults must pay $2.75 to ride the TTC, whereas students and seniors must pay $1.85, and children must pay $0.70.

This is a common practice within a monopoly (like the TTC) which essentially generates profit for the company while keeping sensitive customers (those with high demand elasticities) satisfied.

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