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2 months ago
Delaware and North Dakota have identical state gasoline taxes of 23.0 cents per gallon. When added to the federal gasoline tax of 18.4 cents per gallon, the total tax on one gallon of gasoline in these two states is 41.4 cents. On October 19, 2017, the average price of one gallon of regular gasoline was $2.25 in Delaware and $2.33 in North Dakota. Briefly explain whether this is an example of price discrimination. Assume that the gasoline being sold is identical in both states and there is no cost difference in the gasoline.
Sources: gaspricewatch.com and taxfoundation.org
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Microeconomics
Edition: 7th
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2 months ago
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This appears to be a case of price discrimination, unless the costs of selling gasoline is $2.33 - $2.25 = $0.08 per gallon higher in North Dakota than in Delaware.
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