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Posts: 9130
3 years ago
Define price discrimination. What factors must be present in order for a firm to price discriminate? Why do firms price discriminate?
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Essential Foundations of Economics
Edition: 7th
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Start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible.
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3 years ago
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 Price discrimination is selling a good or service at a number of different prices. In order to price discriminate, the firm must be able to identify and separate different types of buyers. In particular, the firm must be able to identify which buyers are willing to pay a higher price than other buyers. And the firm must sell a product that cannot be resold. Therefore it must not be possible for a buyer who pays a low price to resell the product to a buyer who is willing to pay a higher price. Firms price discriminate because it increases their profit. By price discriminating the firm can charge a buyer a price that is closer to the maximum price the buyer is willing to pay. By setting the price closer to the maximum a buyer is willing to pay the firm can gain added total revenue and thereby added economic profit.
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wrote...
3 years ago
Upwards Arrow This solved my problem, many thanks again.
Start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible.
wrote...
3 years ago
You're welcome Flushed Face
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