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Price discrimination occurs when producers charges different prices to different people for reasons not related to cost. There are generally 3 types.

1st degree price discrimination - when you charge different prices to different individuals, depending on their willingness and ability to pay. This attempts to capture all the consumer surpluses. e.g. auction.

2nd degree price discrimination - where prices differs when individuals purchase good in different quantities. e.g. the increment in parking charges for the 2nd hour will be lower than the first.

3rd degree price discrimination - where prices are charged differently to different group of consumers, depending on the elasticity of demand. Generally the group that has an inelastic demand curve will face higher prices. e.g. bus fares for elderly vs children vs adults.

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Price discrimination is indistinguishable from dumping?

Price discrimination is indistinguishable


Why would a firm practice price discrimination?

price discrimination allows companies to defend


How many types of price discrimination under monopoly?

There are three main types of price discrimination under monopoly: first-degree, second-degree, and third-degree. First-degree price discrimination involves charging each consumer their maximum willingness to pay. Second-degree price discrimination offers different prices based on the quantity consumed or product version, such as bulk discounts. Third-degree price discrimination segments consumers into different groups based on observable characteristics, charging each group a different price.


What are the advantages and disadvantages of price discrimination to consumers and producers?

An advantage to price discrimination to producers is that firms will be able to increase sales. A disadvantage to consumers is that it can cause things to cost more.


What are the three degrees of price discrimination?

The three degrees of price discrimination are: First-degree price discrimination (or personalized pricing) occurs when a seller charges each consumer the maximum price they are willing to pay, capturing all consumer surplus. Second-degree price discrimination involves charging different prices based on the quantity consumed or the product version, such as bulk discounts or premium pricing for higher-quality options. Third-degree price discrimination occurs when prices vary based on identifiable characteristics of different consumer groups, such as age, location, or time of purchase, like student or senior discounts.

Related Questions

Price discrimination is indistinguishable from dumping?

Price discrimination is indistinguishable


Why would a firm practice price discrimination?

price discrimination allows companies to defend


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There are no state laws in Alabama which prohibit discrimination on the basis of sexual orientation.


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There are no state laws in Arizona which prohibit discrimination on the basis of sexual orientation.


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There are no state laws in Arkansas which prohibit discrimination on the basis of sexual orientation.


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There are no laws in Guam that explicitly prohibit discrimination on the basis of sexual orientation.


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B. Discrimination on the basis of race or national origin.


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Are gays and lesbians in Kentucky protected by law against discrimination on the basis of sexual orientation?

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