Find an example of price discrimination (other than those given in the Attend se

Question

Find an example of price discrimination (other than those given in the Attend section). You can find an article or use an example from your own experience.  
Which of the conditions necessary for price discrimination are met?

Class,

There are three types of price discrimination. 

1.     First Degree Price Discrimination - means finding out what your customers are willing to pay for an item and selling it at that price. 

2.     Second-Degree Discrimination: refers to special deals and prices offered to customers who meet certain conditions or who are seeking certain special qualities. 

3.    Third-Degree Discrimination: offer special discounts to members of certain groups, such as students, seniors or military personnel. These discounts are frequently reflected in restaurant offers and admission prices, but can also apply to purchases, such as reduced teacher pricing on books and toys. 

Put your answer in the context of what price discrimination it follows.

Explanation / Answer

Ans

One example of price discrimination is higher end models of cars sold at very high prices than low end models. Now the question is why it is price discrimination. The answer is that higher price charged for high end models is not in proportion to cost of high end models relative to cost of low end models. In other words costs of high end models are not too high relative to low end models to justify the price difference. The conditions which are satisfied are that that elasticities of demand are seperate for these two markets and it is not possible for one to transfer a commodity from one market to other.

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.