Are there any products that are sold in a market in which the seller is able...

Are there any products that are sold in a market in which the seller is able to charge different prices to different consumers? How are the sellers able to do this?

Expert Solution

The process of charging different prices for the same product to different customers is called price discrimination. There are three types of price discrimination-a) Personal, b) geographical c) on the basis of use

Personal price discrimination- sellers charge different prices according to the consumers' level of income as well as their willingness to purchase the product. An example- Doctor's fees. Doctors charge different fees for poor and rich.

Geographical price discrimination- Monopolist charge the different price at the different place for the same product. Suppose sell a pen in region A at $5 and the same pen is sold in the region B at $6. This type of discrimination is called dumping.

On basis of use- For an example for domestic consumption electricity supply board charges a lower rate than that of commercial consumption.

As the monopolist can divide the customers into different groups, so they can charge the differnt price for same product.

Rahul Sunny answered 2 years ago

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