With ________ degree price discrimination, the firm identifies different consumer groups or segments in a market and charges each group a different price.
A)first
B)second
C)third
D)fourth

Question

Quizplus · Accepted Answer

Third degree price discrimination is based on charging different prices to different market segments or groups of consumers. The firm identifies these groups based on their willingness to pay and sets a different price for each group, maximizing profits. This type of price discrimination requires the firm to be able to separate consumers into groups that are relatively uniform in their willingness to pay. Third degree price discrimination involves charging different prices to different consumer groups or segments, based on their willingness to pay. This is achieved by segmenting the market and identifying consumer groups with different price elasticities of demand. The firm then charges a higher price to the group with a lower price elasticity and a lower price to the group with a higher price elasticity. This type of price discrimination is typically used by firms that have market power and can segment the market effectively.

With ________ Degree Price Discrimination, the Firm Identifies Different Consumer