Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Aside from the examples mentioned in the module, suggest another example of price discrimination. Explain why the example represents an effective form of price discrimination.

Aside from the examples mentioned in the module, suggest another example of price discrimination. Explain why the example represents an effective form of price discrimination. Do you feel the seller of the good is able to meet the basic requirements to effectively price discriminate?

image text in transcribedimage text in transcribed
Complete Page 5. X Inefficiency and Monopolies X C Describe The Three Forms Of Pric X C . Give An Example Of Price Discri X Course Hero X + X C D v cms.gavirtualschool.org/DEV16/Social%20Studies/APMicroeconomics/Softchalks/MarketStructuresPartOne/APMicro_MarketStructuresPartOne5.html NT Price Discrimination Price discrimination is the practice of charging different customers different prices. It takes a variety of forms. Common examples include airline pricing strategies (business class v. coach class, advanced purchase v. last minute) and age discounts at movie theaters (child pricing and "senior" pricing). To effectively price discriminate, a monopoly must: . Have price making power . Be able to identify and separate groups of consumers Be able to prevent the transfer of the good from one consumer to another Price Discrimination OER () 0:00 / 14:50 CC Price discrimination can reduce the amount of deadweight loss a market incurs due to monopoly power. It can be eliminated entirely if perfect price discrimination is practiced because the monopoly will produce where price equals marginal cost. However, consumer surplus is lessened and even becomes zero in the instance of perfect price discrimination. This is because each consumer is paying exactly what he or she was willing to pay for the unit - there is no difference between willingness to pay and price paid. Discussion- Price Discrimination It is now time to complete the Price Discrimination discussion. Please respond to the following prompt in the discussion forum: Aside from the examples mentioned in the module, suggest another example of price discrimination. Explain the example meets the requirements of price discrimination. Do you feel the seller of the good is able to meet the basic requirements to effectively price discriminate? Assignment- Comparing Efficiency It is now time to complete the Comparing Efficiency assignment. Please follow the directions on the handout. Submit your completed assignment when finished. Type here to search O G w 4:17 PM Rain coming 10/4/2021Complete Page 5. x Inefficiency and Monopolies X C Describe The Three Forms Of Pric X C . Give An Example Of Price Discri X Course Hero X + X > C D v cms.gavirtualschool.org/DEV16/Social%20Studies/APMicroeconomics/Softchalks/MarketStructuresPartOne/APMicro_MarketStructuresPartOne5.html NT # A Inefficiency and Monopolies Handouts Monopolies produce inefficient outcomes in a market. The inefficiency is a result of producing too little of the product while charging a price that is too high. The inefficiency of a monopoly is apparent when compared to perfect competition. In perfect competition, a firm produces where P = MC (this is the same as saying where demand intersects MC). The sum of consumer and producer surplus is maximized in perfect competition. No deadweight loss exists. However, what is good Comparing Efficiency. for society as whole is not necessarily good for a monopoly. Assignment Handout Monopolies choose to produce where MR = MC and P > MC to maximize profit. This means the firm is producing less than the socially desirable quantity. When P > MC, society values this good beyond its cost of production. Society would like to see more of the good produced. Unfortunately, the monopoly will not produce that amount because it will result in lower profit levels. More In this situation, the deadweight loss triangle appears to the left of the socially optimal level of output (where P = MC). Recall from an earlier module, deadweight loss appears to the left of the intersection of demand and supply when too little Resources is produced. It is the difference between P and MC over the range of quantities Qm to Q* in the graph below. ACDC Econ: Imperfect monopoly DWL Competition Society would like to DWL green trianglel MC see Q* units produced. However, the monopoly Pm AC chooses to produce P *L. Qm units to maximize its profits. The result is the under-allocation of resources to the production of this MR D=AR good. Qm Q* Q Monopolies also result in inefficiency because average costs are not minimized at the profit maximizing level of output found at MR = MC. Price Discrimination Price discrimination is the practice of charging different customers different prices. It takes a variety of forms. Common examples include airline pricing strategies (business class v. coach class, advanced purchase v. last minute) and age discounts at movie theaters (child pricing and "senior" pricing). To effectively price discriminate, a monopoly must . Have price making power . Be able to identify and separate groups of consumers Be able to prevent the transfer of the good from one consumer to another Price Discrimination i OER Type here to search O OH EGG W 4:17 PM Rain coming 10/4/2021

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Expenditure Decisions In The Urban Community

Authors: Howard G Schaller

1st Edition

1317310985, 9781317310983

More Books

Students also viewed these Economics questions