video on price discrimination

http://www.youtube.com/watch?v=nsVfuIfwMqQ

I think this video is probably done by a group of students doing a project similarly to our ILP. In the video, the students act as the tickets seller and customers in a cinema. There are several examples of price discrimination such as discounts to students, children and senior citizens. The video then concludes that cinema is not doing a favor for customers, but actually making more profits by practicing price discrimination.

Now I shall explain briefly how the cinema makes more profit. This is an example of third degree price discrimination where the monopolist charges different prices for the same commodity in different markets. The market for students, children and senior citizens are relatively more price elastic than the market for working adults. Without price discrimination, the cinema would charge a uniform price across all markets which may not be affordable to students, children and seniors. By considering the different demand in different markets and setting a different price, the cinema can now supply an extra market or make this market more profitable (by the theory of elasticity of demand, the producer needs to lower price in a price elastic market in order to increase total revenue). Therefore, the cinemas seem to offer discount to consumers. However, this is just another strategy to increase their revenue.