Match the corresponding examples of first-degree, second-degree, or third-degree price discrimination. 1. The publishers of the...

Match the corresponding examples of first-degree, second-degree, or third-degree price discrimination.

1. The publishers of the Journal of Price Discrimination charge a subscription price of $75 per year to individuals and $300 per year to libraries.

2. Ye Olde Country Club charges golfers $12 to play the first 9 holes of golf on a given day, $9 to play an additional 9 holes, and $6 to play 9 more holes.

3. The U.S. government auctions off leases on tracts of land in the Gulf of Mexico. Oil companies bid for the right to explore each tract of land and to extract oil.

Expert Solution

First degree price discrimination refers to a type in which monopolist charge the highest possible price from different consumers on the basis of their willingness to pay. This discrimination cause consumer surplus to be zero.

Second degree price discrimination is also known as block pricing because under this monopolist charge different price from different consumer according to the quantity they purchased.

Third degree price discrimination refers to the type in which monopolist divide the customers according to specific characterstics and then offer different price from each division.

1. The publishers of the Journal of Price Discrimination charge a subscription price of $75 per year to individuals and $300 per year to libraries. Here consumer is divided into two: individuals and libraries so it is a type of Third degree price discrimination.

2. Ye Olde Country Club charges golfers $12 to play the first 9 holes of golf on a given day, $9 to play an additional 9 holes, and $6 to play 9 more holes. Here different blocks are made on the basis of the quantity so it is a type of Second degree price discrimination.

3. The U.S. government auctions off leases on tracts of land in the Gulf of Mexico. Oil companies bid for the right to explore each tract of land and to extract oil. Here through auction each consumer will bid till the bid exceeds its willingness to pay so at last government charging according to willingness to pay so it is a type of First degree price discrimination.

Rahul Sunny answered 2 years ago

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