Price Discrimination Flashcards
1
Q
Price discrimination
A
A firm charging different prices to different consumers for the same product
2
Q
Is it illegal?
A
No
3
Q
What will it depend on (consumer)
A
Ability to pay
Willingness to pay
4
Q
1st degree
A
Firm charges MAXIMUM price to INDIVIDUAL consumers
5
Q
2nd degree
A
When a firm charges max price to different GROUPS of consumers
6
Q
3rd degree
A
When a firm identities groups of consumers with similar characteristics
7
Q
Advantages
A
Consumer surplus goes to producer surplus= increase revenue
Increased output
