Question

Briefly define price discrimination and state the four conditions for it to be viable to a...

Briefly define price discrimination and state the four conditions for it to be viable to a firm.

Homework Answers

Answer #1

price discrimination is the practice of charging different prices from a different consumers on the basis of their preferences which is measured by the elasticity of demand.

Some of the required conditions include

Ability to charge different prices from consumers which indicates market power of the firm

Presence of two different markets with two different elasticity of demand

Prevention of resale of the good sold between two markets.

Recognition of the preferences of consumers according to their elasticity.

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