09_Understanding Price Discrimination and Monopolies (micro)

Price Discrimination

The practice of charging different prices for the same good or service based on customers' willingness to pay or sensitivity to price

Marginal Revenue

The additional revenue generated from selling one more unit of a product

Willingness to Pay

A customer's maximum price for a good or service

Price Elasticity of Demand

The responsiveness of the quantity demanded to changes in price

Volume Discounts

A strategy offering lower prices for larger quantities of a product

Freemium Model

Offering a basic version of a product for free and a premium version for a fee

Deadweight Loss

The loss in total surplus due to market inefficiency

Natural Monopoly

A market where a single firm can supply the entire demand at a lower cost than multiple firms due to economies of scale

Public Ownership

Giving the government control over monopolies to set fair prices and ensure public interest

X-Efficiency

A regulatory approach allowing monopolies to retain some profits from cost reduction to encourage innovation

Horizontal Merger

Two firms in the same industry merge to increase market share

Vertical Merger

Two firms at different production stages merge

Market Failure

Occurs when a real economy falls short of an ideal economy due to inefficiencies