Question

How does price discrimination benefits monopolies.

How does price discrimination benefits monopolies.

Homework Answers

Answer #1

Price discrimination occurs when a firm charges different prices to different group of customers for an identical good or service. The monopoly has control over pricing strategies, so it often charges different prices to different consumers for an identical good. Consumers with elastic demand pay less than the consumers with less elastic demand. Thus, By discriminating price, a monopoly maximizes it's profit by extracting consumers surplus and turning it into producers surplus or supernormal profit, and creating less amount of deadweight loss than nondiscriminating monopolists.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Loyalty plans offered by booksellers can be viewed as a form of: a) price discrimination, offering...
Loyalty plans offered by booksellers can be viewed as a form of: a) price discrimination, offering lower prices to people that are more price sensitive and higher prices to everyone else. b) a price ceiling, creating an artificial shortage of top-selling books. c) contract manipulation, charging prices that mimic monopolies. d) a public good because everyone benefits from its use.
8) How does discrimination impact the economy?
8) How does discrimination impact the economy?
It is argued that perfect price discrimination is efficient. Does this mean that it should be...
It is argued that perfect price discrimination is efficient. Does this mean that it should be encouraged? Explain why or why not.
1. Does price discrimination increase or decrease the efficiency of the market for college education? Why?...
1. Does price discrimination increase or decrease the efficiency of the market for college education? Why? 2. Is college price discrimination fair? (Start by defining “fair.”)
In which cases would an organization benefit from using direct and indirect price discrimination? Does market...
In which cases would an organization benefit from using direct and indirect price discrimination? Does market structure influence the capacity of the firm to use price discrimination?
QUESTION 13 Third-degree price discrimination is discrimination among a. units. b. quantities. c. buyers. d. prices....
QUESTION 13 Third-degree price discrimination is discrimination among a. units. b. quantities. c. buyers. d. prices. 4 points    QUESTION 14 Second-degree price discrimination is discrimination among a. units. b. quantities. c. buyers. d. prices. 4 points    QUESTION 15 Which of the following is a necessary condition for price discrimination to hold? a. The seller must be a price searcher. b. The seller must be able to distinguish between customers willing to pay different prices. c. Reselling the product...
What are the benefits of platform monopolies? What are the costs? a.) Benefits include increased efficiency...
What are the benefits of platform monopolies? What are the costs? a.) Benefits include increased efficiency and negative network externalities. Costs include increased competition, a divide between monopolists' goals and society's goals, and privacy concerns. b.) Benefits include decreased efficiency, positive network externalities, and dynamic growth. Costs include decreased competition, similarities between the good for monopolist and for society, and privacy concerns. c.) Benefits include increased efficiency, positive network externalities, and dynamic growth. Costs include decreased competition, a divide between...
How to explain the first-degree price discrimination in the airline industry?
How to explain the first-degree price discrimination in the airline industry?
Cite an example of an industry which can practice price discrimination, and explain how it implements...
Cite an example of an industry which can practice price discrimination, and explain how it implements price discrimination.
How are the natural monopolies different than the regular monopolies? Should there be this difference?
How are the natural monopolies different than the regular monopolies? Should there be this difference?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT