ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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price discrimination
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market power
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government monopoly
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economies of scale
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Detailed explanation-1: -Third degree discrimination, also termed group pricing, occurs when firms divide their consumers into different groups and sell the same products at different prices to specific groups. For example, infants can enjoy a flight free of cost, while anyone above two has to pay for the flight tickets.
Detailed explanation-2: -Types of Price Discrimination These degrees of price discrimination are also known as personalized pricing (1st-degree pricing), product versioning or menu pricing (2nd-degree pricing), and group pricing (3rd-degree pricing).
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: -Price discrimination leads to exploitation of consumers because the price charged here is based on the principle of “as the traffic will bear”. This means that every consumer is charged the maximum price he can pay.
Detailed explanation-5: -First Degree Price Discrimination. Second Degree Price Discrimination. Third Degree Price Discrimination. #1 Imperfect competition. #2 Prevention of resale. #3 Elasticity of demand. The Firm. The Consumer.