Question

1) Price discrimination is a marketing tool most available to firms in monopoly market structures. Have you been charged a price that was either higher or lower than someone else for the same good or service? Why do you think that is? Describe the situation and comment on how it relates to comparative demand.

2) Describe a (non food-related) purchase decision you made where price was not the deciding factor. What change might cause price to be more important?

Answer 1

1)

The monopoly firm tends to the follow the practice of price discrimination to the increase the profit level. the price discrimination leads to the rise in the profits of firm relative to the single pricing strategy.

We have faced many instances where the firms or institution tends to the follow the price discrimination. We visited the state museum where the students were charged the low price relative to the adults who were not having any college or school Identity cards.

Here the students relatively have low disporable income, thus their demand for the vising the museum is rather elastic, thus they are charged low price. On other hand, the adults have more disposable incomes, thus their demand for visiting the Museum is the price inelastic.