Question

Explain Dupuit's theory of price discrimination. Is that theory still valid today. Have you ever been subject to price discrimination. Provide up to 3 specific examples.

Answer 1

Dupuit went on to define "relative utility" as the area under the demand/marginal utility curve above the price and used it as a measure of the welfare effects of different prices – concluding that public welfare is maximized when the price is zero. Dupuit's theorem states that the loss of utility, AUm, is proportional to the square of the tax or price Second-degree price discrimination occurs when a company charges a different price for different quantities consumed, such as quantity discounts on bulk purchases.

subject to price discrimination

1. In an Adventure Park: The prices are different for children, adults and senior citizen also they differ in weekdays and weekends.
2. In Movie Theater : The prices are different in different time slots. Alo on weekends and weekdays.
3. In a grocery store when I bought in bulk they offered it on a lower price whereas when I bought a little quantity they charged full amount.