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Economics - Ethan Parmar > T5 - Price Discrimination 2.0 > Flashcards

T5 - Price Discrimination 2.0 Flashcards

1
Q

what is price discrimination

A

when firms sell the same good to different groups of consumers for different prices

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2
Q

what is first degree price discirmination

A

charging the max price consumers are willing and able to pay

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3
Q

what is second degree price discrimination

A

different prices based on quantity or chocies

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4
Q

what si third degree price discrimianton

A

diff prices for different segments of the market

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5
Q

examples of different demographics in 3rd degree price disc

A

age
incoem group
time of use

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6
Q

conditions neccessary for price discrimiantion

A

price making ability
ifnormation to seprate the market (diff peds)
be able to prevent reseale and seperate the market
low admin too seperate the market

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7
Q

what is proper term for resale into sup markets

A

price seepage

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8
Q

are there any differences in costs of production for price discrimiantion

A

no

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9
Q

how cna firms haev price setting ability

A

monopoly power

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10
Q

with regards to ifnoramtion what must firms haev it on

A

be abel to sepertae teh arket into diferents price elasticicties of demand

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11
Q

what happens with consuemr surplus in first degree price disc

A

all of consumer surplsu turned to monopoly profit

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12
Q

examples of second degree price discrimination

A

loyalty cards for frequent buyers
colelction fo coupons from maagazines
eneergy is cheaper after high qty of units boughts

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13
Q

why may 2nd degree pd be called indirect pd

A

as consuemrs have a chocie as to the price they are paying

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14
Q

why are soem chocies cheaper in 2nd degree pd

A

as they impose costs to consumers

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15
Q

exampels of costs imposed on consumers in 2nd dgeree

A

buying in bulk
unsociable hours
collecting coupons

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16
Q

when does 3rd degree price discrimination occur

A

when a firm is abel to segement the market into different peds

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17
Q

econ dal cons of pd

A

alloactive innefficiny
inequality
anti comeptitive pricig

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18
Q

econ dal pros of pd

A

dynamic effienc
economies of scale
soem poeple benefit
cross subsidisation of proft

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19
Q

ahmad pros of pd to the firm

A

firms offer unprofitabel srvices
spread demand
avoid congenstion
inc profit
eco of scale
effinecint use of infrastructure
better use of space

20
Q

how si better use of spcae a pro of pd for firms

A

able to clear execss supply and existign stocks quickly to cater and stock newer shit thtas in demand

21
Q

how is effecient use of infrasrtcuture a pro to firms

A

those with high fixed costs gernally have minimal mc , so the cost to add oen more consumer isnt much menaign they can turn that added revenue into profit or cover new costs

22
Q

cons of price discrimiantion firms mr ahmad

A

admin costs

23
Q

mr ahamds adv of prd

A

beenfits to soem groups
enables felxibility
geenates psotiiev externalities

24
Q

how does pd enabel flxibility for xonusmers

A

consuemrs are abel to match pruchasign and shopping to them

25
Q

exampels of flxibility in pd

A

elderly peopel beenfitign from early bird prices

26
Q

exampels of hwo pd gens psotitive externalties

A

say private schools offerign discoutned priced places to those who cnanot afford it

27
Q

disadvantages of pd to consuemrs

A

exploitation fo captive markets
fall in consumer suprlus
unfair

28
Q

examples of explotiation fo captive markets for ernergy prices

A

where esxistign customers pay higher prices whic subsidises discoutns for new consumers

29
Q

limtiations of pd

A

the condtions to be abel to price discrimiante may nto eb fully met , meanign there is a limit to the extent to whcih diff rpices can be set

30
Q

draw backs of frist degree pd

A

time consumign
difficutl to do for most businesses

31
Q

what must companies be abel to do to avoid elimiantion fo profits

A

avoid resale

32
Q

how does spread demand help firms in pd

A

as pd encorages peopel to travel at unpopular times say, meanign early in mronign, so not too many peopel in palce at once

33
Q

how can markets be kept seprate in pd

A

by time
physical distance
nature of use

34
Q

why cna price disc be costsly

A

as tryign to seprate the market means mroe enforcement and shit that they are kept serpate

ie added proccesses to identify tickets to consuemrs, or extra inspectors to chekc such things

35
Q

how can price seepage and resale be prevented

A
36
Q

benefits of 1st degree

A

profit and max producer surplus

37
Q

what isnt needed to be doen for first degree pd

A

reduce the price of all units sold to increase sales

38
Q

issues with first degree

A

seller would need to seeprate maret for individual deals

sellers would have to anticipate what customers would eb willing to pay

39
Q

types of second degree

A

bulk selling offers
last minute tickets for certian products
gettign rid of excess when lwo demand
peak adn off peak sales

40
Q

what situation woudl first degree pd be used

A

buyign a car

41
Q

when may 3rd degree pd be seen

A

studnets and pensioner discounts
booking in advance

42
Q

easiest way to knwowhat firms are doign 3rd degree pd on

A

look at teh good
look at who consumes it
look at why it may be inealstci demadn on it
look at why elastic demand
boom

43
Q

what is main exampel fo 2nd degree

A

bulk offers
2 for 1 offers
coupons
loaylt cards

44
Q

howa re loyalty cards a form of secodn degree pd

A

as more consuemrs buy they may end up gettign the next product free ro at a high discount

45
Q

how can price discirmiantion act as a bte

A

firms that can afford may offer better discoutns, lwoer prices, capturign greater market share

46
Q

ways to prevent resale

A

id on tickets
software businesses requiring school emails
students showign id cards

Economics - Ethan Parmar (73 decks)

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