monopoly 4 Flashcards
personal price discrimination
when different prices are charged from different individuals according to the level of income and willingness to purchase a product.
geographical price discrimination
when the monopolist charges different prices at different PLACES for the same product.
on the basis of use
occurs when different prices are charged according to the use of a product.
Electricity Pricing:
Lower rates for residential use (lighting, appliances).
higher rates for commercial use (offices, retail).
according to time
when a seller charges different prices for the same product at different times.
Ex: Christmas
how to stop price discrimination ?
though Arbitrage
the process of buying a good in one market at a low price & selling it in another market at a higher price to profit from the price difference.
How can price discrimination raise economic welfare?
when a company price discriminates, it is trying to maximize their profits. By doing that they are accidentally allowing everyone in society to achieve the product desired therefore allowing everyone an opportunity to gain.
