ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Price discrimination is a selling strategy that charges customers different prices for the same product or service based on what the seller thinks they can get the customer to agree to. In pure price discrimination, the seller charges each customer the maximum price they will pay.

Detailed explanation-2: -"Personalized pricing” (or first-degree price differentiation)-selling to each customer at a different price; this is also called one-to-one marketing. The optimal incarnation of this is called “perfect price discrimination” and maximizes the price that each customer is willing to pay.

Detailed explanation-3: -Price discrimination is a sales strategy of selling the same product or service to different customers for different prices. First-degree price discrimination involves selling a product at the exact price that each customer is willing to pay.

Detailed explanation-4: -Horizontal: Goods are different but at the same price some consumers will buy one and some will buy other, it really depends on their preferences. Example: Pepsi y Coca Cola; 2. Vertical: Goods are different and all consumers would prefer one to the other if they were sold at the same price.

Detailed explanation-5: -Consumer surplus is nowhere in this type of cost discrimination. Second degree price discrimination refers to the price set per the quantity consumed. It is also known as product versioning or menu pricing.