Lesson 3.14 - Price Discrimination

Vocabulary practice flashcards covering the concepts, types, conditions, and real-world examples of price discrimination from Lesson 3.14.

Price Discrimination

The practice of charging different prices to different customers for the same product.

First Degree Price Discrimination

Charging each customer the highest price they are willing to pay.

Second Degree Price Discrimination

Charging different prices based on how much someone buys or which version of a product they choose.

Third Degree Price Discrimination

Charging different groups of customers different prices, such as offering distinct pricing to students and adults.

Conditions for Price Discrimination

A firm can price discriminate when customers have different price sensitivities and resale between customers is prevented.

Negotiating a Car Price

An everyday example of first-degree price discrimination, where the seller attempts to figure out the absolute most a customer is willing to pay.

Financial Aid Process

A mechanism related to price discrimination where colleges use applicants' financial information to evaluate how much each student can afford to pay.

Price Discrimination with Scholarships

A strategy where wealthier students pay higher tuition while students needing assistance receive discounts, allowing a school to attract more students and earn greater overall revenue than charging a single price.