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?

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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 1 year ago

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