Question

Give examples of price discrimination. In each case explain why the monopolist chooses to follow this business strategy besides airline prices or movie tickets

Answer 1

One example of price discrimination is the combo pack that can be availed at restaurant outlets where the price of a mix of 2 to 3 unit combo is quite less when compared to that of some of the prices of those items individually. in this regard this is followed by a monopolist because the fixed cost is high and all he needs to do is to get back the variable cost which would be and buy shoe combo discounts you can easily generate all the variable cost and this leads to higher sales margins which can generate more revenue to the monopolist.

another example of price discrimination is free entry for women customers to pubs and this is followed because of the fact that this method can grab in or attract women who are willing to come with their partners at a lower price and this could also generate more sales or revenue by paying for one entry as the variable cost for each person is quite low and more precisely this type of price discrimination is called as third degree price discrimination.