Question

1. You are employed by a firm with monopoly power. The boss wants to increase profits.

   1. Explain the power of price discrimination to your boss.

   2. Explain the requirements and assumptions for successfully implementing this approach.

   3. Explain 2 things that would prevent this approach from being successful.

Lots of detail please!

Answer 1

In this situation, a person is employed by a boss with Monopoly power. It means that the person has the power to retaliate the things of the person and to approach the person at any level.
In this case, the person has the right to take the core decision of the form related to the project because the boss wants to increase profit and for the purpose of increasing profits there is a various decision which must be taken by the employee assigned by the boss with Monopoly power.
The most important two things are included: a person with the Monopoly power states that the person can terminate any person from the organisation and has the right to take immediate decisions in the organisation.
The power of price discrimination means a policy where we can charge the price of the goods according to the customer and according to the purchasing power of the customer suppose a person is able to handle a luxury cost that is additionally included with the product by providing some additional benefit then, in this case, the customer must charge high price by the seller so this type of price discrimination is useful in increasing the profit in the organisation.
Price discrimination is a good policy in the Monopoly because a seller knows about the fact that very fewer choices are available.
The requirements and assumptions for successfully implementing this approach are that there must be upgrading of the product and number to the market area must be high.
The two things that would prevent this approach from being successful are number one if there is any competitor available in the market then the commodity is not useful.