ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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grouping customers together based on their wants
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division of customers into groups based on how much they will pay for a good
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charging everyone the same price for goods
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None of the above
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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: -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-3: -Third Degree Price Discrimination Also known as group price discrimination, third-degree price discrimination involves charging different prices depending on a particular market segment or consumer group. It is commonly seen in the entertainment industry.
Detailed explanation-4: -Second degree price discrimination occurs when consumers receive a discount on multiple purchases. Firms are able to offer lower prices for bulk purchases as they benefit from economies of scale. Examples of second-degree price discrimination include: coupons, buy two get one free, multi-packs, and loyalty cards.
Detailed explanation-5: -Fourth degree/reverse price discrimination Prices are the same for different customers, even if organizational costs may vary. For example, a coach class airplane passenger may order a vegetarian meal. Their ticket cost is the same, but it may cost more to the airline to obtain a vegetarian meal for them.