Question

Look for a news headline that illustrates ‘price discrimination’. Quote the headline and cite properly (so that others like classmates and instructor can find your headline easily, using your citation), and explain precisely how price discrimination is illustrated or applied in the story suggested by the headline. OR: Upload a photo of something you observed or noticed in a marketplace that illustrates ‘price discrimination’. And explain precisely how the photo that you’ve uploaded illustrates ‘price discrimination’.

Answer 1

Price Discrimination: Price decision is with the producer under monopoly.Price discrimination is practiced to gain more profits. Monopolist will change different prices for the same commodity or service in the market. It is practiced in several ways. Broadly,there are three methods.

They are:

1.Personal Discrimination: Price are charged depending upon the paying capacity of the consumers.Prices may be different for poor and rich customers.

Examples:

• Doctors,Lawyers may charge higher fee to rich and less to poor sections.
• Discrimination is practiced in railway fares in the case of children,women,adults and senior citizens.

2.Use Discrimination: Depending upon the use of the commodity,different prices are charged from consumers.This kind of practice can be observed mostly in public services.Prices are different in railways, Electricity,Telephone services.

Examples:

• Electricity charges are different for Agriculture,Industry,and Domestic use.
• Similarly prices are different for passengers and goods transport in railways.

3.Discrimination between Markets: Markets may be separate because of distance and differences in demands for goods. A monopolist charges two kinds of prices in in these two markets.

Examples:

• Two kinds of prices are charged in Domestic and Foreign market for the same commodity.Generally higher price is charged in Domestic market and lower price in Foreign market.