Price Discrimination Flashcards
1
Q
What is first degree price discrimination
A
The good or service is sold to each individual consumer at the highest price they will pay for it. Meaning consumer surplus = 0
2
Q
What is second degree price discrimination
A
Separate prices for groups of consumers
Eg. Adult and child tickets
3
Q
What is 3 degree price discrimination?
A
Different prices are set in different countries depending on the elasticity of demand in the country
4
Q
What are the advantages to a price discriminator of price discrimination
A
Income redistribution
Profits
Larger outputs
5
Q
What are the negative effects on the consumer of price discrimination
A
Loss of welfare
Inequitable
6
Q
What are the positive effects on the consumer of price discrimination
A
Reinvestment
Fairer
