Price discrimination

Price discrimination is defined as a business charging different consumers ... prices for the ... product, whereby the price difference is not due to the differences in the cost of supplying the customers.

• different …same

• same …same

• same...different

• different …different

Price discrimination is not possible under

• Perfect competition

• Monopoly

• Oligopoly

• Monopolistic Competition

Conditions for Price Discrimination

• ability to identify and segment the market into separate groups

• have an PED that is price inelastic

Firms' ability to prevent re-sale (arbitrage)

• Essential condition for price discrimination
• Non-essential condition for price discrimination

A firm with market power engages in price discrimination to:

• earn a higher profit
  
• increase consumer surplus
  
• decrease deadweight loss
  
• make its demand more elastic 

A grocery store that offers one can of soup for $0.35 and three cans for $1.00 is engaging in

• 1st degree

• 2nd degree

• 3rd degree

Online scalping of concert and sporting-event tickets is an example of

• 1st degree price discrimination

• 2nd degree price discrimination

• 3rd degree price discrimination

Reducing fares for bus travel for over 60's is a form of price discrimination.

• First degree price discrimination

• Second degree price discrimination

• Third degree price discrimination

First degree price discrimination is the most profitable solution for a monopolist because it is able to convert all producer surplus to consumer surplus.

• True

• False

Price discrimination could lead to high earning train travelers effectively subsidizing poorer people's train journeys

• False

• True