T5 - Price Discrimination **

Question 1

What is 1st degree PD

Answer 1

Charging max price consumers are willing to pay

Question 2

2nd degree price disc

Answer 2

Charging diff price dependent on quantity or choice

Question 3

3rd Degree price descrimination

Answer 3

Charging diff prices to diff demographics

Question 4

Examples

Answer 4

Market haggling
Mobile contracts
Tax fare at peak times
Cinema ticket prices
Hairdresser prices
Educational Bursaries

Question 5

What do different price elasticities of demand cause

Answer 5

Varied prices

Question 6

What are some barriers to prevent firms switching suppliers

Answer 6

Selling products and unique moments of times

Question 7

What is price seepage

Answer 7

Consumers buyign at lower prices and selling at a low price in different submarketss

Question 8

What must different segments have

Answer 8

Different PEDs

Question 9

Why is a firm able to capture all available consumer surplus

Answer 9

By selling maximum prices for each unit possible

Question 10

Is first degree price discrimiantion common

Answer 10

No, it is rare

Question 11

First degree price disc features

Answer 11

Firms benefit increase in profits
Does not to reduce price of all untis sold to icn sale
Suppliers need to anticipate what consuemrs are willing to pay
Sellers would need to spserate markets and reach deals with indivuda lcustoemrs

Question 12

Second degree features

Answer 12

Selling in quantities
Getting rid of excess when demand is low
Peak/off peak

Question 13

Without discrimiantion what would total revenue be

Answer 13

Lower

Question 14

Examples of 2nd degree price disc

Answer 14

Lower unti cost for higher quantity
Phoen deals whcih give x free texrs
Initally untis of electricity are set at a tariff

Question 15

Examples of 3rd degree

Answer 15

Student discounts on trains
Discounts for buying train tickets
Discounts for travelling off peak

Question 16

Benefits of PD

Answer 16

Firms can fofer service that would be unprofitable
Soem groups beneift from cheaper prices
Spreads demand and avodis conegstion
Increased investment from profit

Question 17

Cons

Answer 17

Soem peopel may pay higher
Declien in consumer surplus
Potentially unfair
Admisntratiev costs

Question 18

Adv of PD - Business

Answer 18

Profit maxamisation
EoS
Efficent use of infrastructure
Better use of space

Question 19

Adv of PD - Consumers

Answer 19

Possibility of lower prices
Benefits some groups
Enables flexibility
Generation of postitve externalities

Question 20

Dis adv of PD

Answer 20

Exploitation of captive markets
Limitations

Question 21

What are captive markets

Answer 21

markets where the potential consumers face a severely limited number of competitive suppliers;

Question 22

Meaning of limitations in disadvantages

Answer 22

The ability to PD may be limited as teh conditons neccessary are not fully met,limits on the extent in whcih diff prices can be applied