a. List three types of demand discrimination. b. Which is the most difficult to eliminate? Why? c.
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a. List three types of demand discrimination.
b. Which is the most difficult to eliminate? Why?
c. Which is the easiest to eliminate? Why?
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a Three types of demand discrimination Demand discrimination is a pricing strategy used by businesses to charge different prices to different customers for the same product or service based on the customers willingness or ability to pay Here are three types of demand discrimination Firstdegree price discrimination This occurs when a company charges each customer the maximum price they are willing to pay for a product or service This type of price discrimination requires the company to have complete information about each customers willingness to pay which is rarely possible Seconddegree price discrimination This type of price discrimination involves charging different prices based on the quantity purchased For example a company may offer a lower price per unit for larger quantity purchases This type of price discrimination is also known as quantity discounts Thirddegree price discrimination This occurs when a company charges different prices to different groups of customers based on characteristics such as age location or income level For example a company may charge higher prices to customers in highincome areas compared to those in lowincome areas b Most difficult to eliminate The most difficult type of demand discrimination to eliminate is firstdegree price discrimination as it requires complete information about each customers willingness to pay This type of price discrimination is rarely possible because it is difficult for companies to accurately determine each customers reservation price ie the maximum price they are willing to pay Additionally customers are often unwilling to reveal their reservation prices making it even more challenging for companies to implement this pricing strategy c Easiest to eliminate The easiest type of demand discrimination to eliminate is thirddegree price discrimination as it is based on observable characteristics such as age location or income level Companies can use market research and data analysis to identify differences in demand across different customer ...View the full answer
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