5.7 Price Discrimination

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5 Terms

1
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What is price discrimination

Where a firm charges different prices to different consumers for an indentical good/service with no differences in costs of production

2
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Provide an example of price discrimination

Student discount on software or transportation fares

3
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What conditions are necessary for price discrimination

Market power, ability to segment markets, and prevention of resale

4
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Benefits of price discrimination to Firms

Increases revenue and profit by capturing more consumer surplus; helps cover fixed costs.

5
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Benefits of price discrimination to consumers

Access to lower prices for certain groups, which can increase consumer surplus.