0
Price discrimination is based on the idea that each customer has his or her own maximum price he or she will pay for a good. If a monopolist sets the good's price at the highest maximum price of all the buyers in the market, the monopolist will only sell to the one customer willing to pay that much. If the monopolist sets a low price, the monopolist will gain a lot of customers, but the monopolist will lose the profits it could have made from the customers who bought at the low price but were willing to pay more.
Price discrimination recognizes that groups of consumers are willing and able to pay different amounts for a good. (gradpoint)
Wiki User
∙ 8y ago
Add your answer:
Earn +20 pts
Why would a firm practice price discrimination?
price discrimination allows companies to defend
Price discrimination is indistinguishable from dumping?
Price discrimination is indistinguishable
How would you describe unfair trade practice laws?
These laws involve various types of business competition, especially with reference to trademarks, price maintenance, and price discrimination.
What are the necessary condtions for a firm to practice price discrimination?
There must be a constant and there must be a consistent price differential for that constant. IE, by age, sex, religion, ethnicity, etc.
What are the Advantage and disadvantage of price discrimination?
Advantages of Price Discrimination 1. Firm will be able to increase revenue. This may enable some firms to stay in business who may have otherwise have made a loss. E.g. train companies need price discrimination to offer off peak travel 2. Increased revenue can be used for Research and Development 3. Some Consumers will benefit from lower fares. E.G. old people can take advantage of cheaper fares on trains. Disadvantages of Price Discrimination 1. Some Consumers will face higher prices, leading to allocative inefficient and a loss of consumer surplus. 2. Often those who benefit from lower prices may not be the poorest. For example some old people may be quite rich, but unemployed will have to pay the full adult fare. 3. There may be administration costs involved in separating the markets
Why would a firm practice price discrimination?
price discrimination allows companies to defend
What is this practice called a firm sells natural gas to a city for one price and sells the same gas to an outlying village at another price?
price discrimination
Why do companies practice discrimination?
Price discrimination is based on the idea that each customer has his or her own maximum price he or she will pay for a good. If a monopolist sets the good's price at the highest maximum price of all the buyers in the market, the monopolist will only sell to the one customer willing to pay that much. If the monopolist sets a low price, the monopolist will gain a lot of customers, but the monopolist will lose the profits it could have made from the customers who bought at the low price but were willing to pay more. Price discrimination recognizes that groups of consumers are willing and able to pay different amounts for a good. (gradpoint)
What is meant by the term discrimination?
Answer: Price discrimination is the practice of one retailer, wholesaler, or manufacturer charging different prices for the same items to different customer. This is a widespread practice that does not necessarily imply negative discrimination. Early forms of price discrimination certainly existed in Jim Crow law states, where a black consumer might very likely pay more for the same quantity and items than a white consumer would. In general, this type of price discrimination is very rare today. Price discrimination, as it is now understood, is separated into degrees. First, second and third degree price discrimination exist and apply to different pricing methods used by companies. Much depends on the understanding of the market in segments, and also the consumer's ability to pay a higher or lower price, called elasticity of demand. A person who might pay more for an item is thought to have a low elasticity of demand. Another person who will not pay as much has a high elasticity of demand.
Price discrimination is indistinguishable from dumping?
Price discrimination is indistinguishable
What are the necessary condtions for a firm to practice price discrimination?
There must be a constant and there must be a consistent price differential for that constant. IE, by age, sex, religion, ethnicity, etc.
How would you describe unfair trade practice laws?
These laws involve various types of business competition, especially with reference to trademarks, price maintenance, and price discrimination.
What is meant by the term price discrimination?
Price discrimination exists when the same product is sold at different prices to different buyers. The cost of production is either same, or it differs but not as much as the difference in the charged prices. The necessary conditions, which must be fulfilled for the implementation of price discrimination are the following:The maket must be divided into sub-markets with different price elasticities.There must be effective separation of the sub-markets, so that no reselling can take place from a low-price market to a high-price market.
What kind of selling strategy is price discrimination?
Price discrimination is a strategy wherein identical goods or services are sold at different prices to different customers. It can occur when the seller is aware of the maximum amount customers are willing to pay for a product, when the price fluctuates based upon supply and demand, or when a price is altered based upon location, customer segment, or individual customer identity. In some situations, or parts of the world, depending upon the type of price discrimination, the practice may be considered unethical or even illegal.
What is fast food level of price discrimination?
Price discrimination is when the identical fast food item is sold for a different price depending on which store you purchase from. Typically, the level of price discrimination is higher from state to state and about the same for stores located in the same city.
Racial discrimination that results from practice rather than law is called?
Racial discrimination that results from practice rather than law is called de facto discrimination. De facto means in fact or in effect.
What is the evidence of price discrimination at a local bar called the Stabilizer?
Which would be evidence of price discrimination at a local bar called the Stabilizer
