A gravel works near Albany, New York, offers #7 pea gravel at $47 per ton, FOB-destination, in New York City. The FOB-destination price for the same product in Albany is $42 per ton.
(a) What price-segmentation fence is being used here? What is the most likely factor that supports this price segmentation?
(b) If it is the case that transporting a ton of gravel between Albany and New York costs approximately $10, what additional price-segmentation fence is being used? What is the most likely factor that supports this additional level of price segmentation?