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price discrimination allows companies to defend

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Q: Why would a firm practice price discrimination?
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What are the necessary condtions for a firm to practice price discrimination?

There must be a constant and there must be a consistent price differential for that constant. IE, by age, sex, religion, ethnicity, etc.


What is pricing discrimination?

Price discrimination is the practice of charging the highest price to different consumers. This is so that the firm can maximize the revenue it receives for the goods it produces. Price discrimination is mainly for markets that are monopolistic, or oligopolistic. In these kinds of markets the firm has to decrease price in order to sell more of the good because they are the only supplier. Because of this marginal revenue is derived from the demand but the profit maximization condition is still marginal cost equals marginal benefits but marginal benefits does not equal the demand curve. The firm wants to price discriminate in order to avoid the decreased revenues because of the lost revenue because they have to decrease prices to get more consumers. One of the biggest problems in practicing price discrimination is that the firm needs perfect information in order to maximize the returns to price discrimination. Finding this information could be very costly to obtain, or could be realistically impossible to obtain.


Why would a firm raise the price of a product after a producer determines that the demand for one of its products is inelastic?

The firm would raise the price because the firm's total revenues would probably increase.


Difference between price discrimination and dumping?

price discrimination is to rip highest possible profit out of consumers. there are three different price discrimination, first degree - where firm charges highest possible price each individual is willing to pay; in this case, consumer surplus is zero second degree - where firm charges different price for different quantity of good; in this case, firm rips off some of consumer surplus third degree - in this case, firm separates good into two or more different market as demand for one group of consumer is higher, or more elastic etc, than the other group of consumers. in order to exercise price discrimination, firm must have significant market power (to set prices) and is able to prevent re-selling, and also need to able to identify different consumers/group of consumers demand for the good. while dumping occurs when foreign firm trying to increase market share/eliminate domestic firms out by setting lowest price where no domestic firm will be willing to supply, hence all of the quantity will be supplied by the foreign firm. in such case, firm may initially experience losses, but in long run, it will drive other firms out of the market, hence will be a monopoly and will rip profit out of consumers.


Can a perfectly competitive firm set a price for its products that is above marginal cost?

A perfectly competitive firm would set its prices at a perfectly competitive price.

Related questions

What is this practice called a firm sells natural gas to a city for one price and sells the same gas to an outlying village at another price?

price discrimination


What are the necessary condtions for a firm to practice price discrimination?

There must be a constant and there must be a consistent price differential for that constant. IE, by age, sex, religion, ethnicity, etc.


What is pricing discrimination?

Price discrimination is the practice of charging the highest price to different consumers. This is so that the firm can maximize the revenue it receives for the goods it produces. Price discrimination is mainly for markets that are monopolistic, or oligopolistic. In these kinds of markets the firm has to decrease price in order to sell more of the good because they are the only supplier. Because of this marginal revenue is derived from the demand but the profit maximization condition is still marginal cost equals marginal benefits but marginal benefits does not equal the demand curve. The firm wants to price discriminate in order to avoid the decreased revenues because of the lost revenue because they have to decrease prices to get more consumers. One of the biggest problems in practicing price discrimination is that the firm needs perfect information in order to maximize the returns to price discrimination. Finding this information could be very costly to obtain, or could be realistically impossible to obtain.


Why would a firm raise the price of a product after a producer determines that the demand for one of its products is inelastic?

The firm would raise the price because the firm's total revenues would probably increase.


Difference between price discrimination and dumping?

price discrimination is to rip highest possible profit out of consumers. there are three different price discrimination, first degree - where firm charges highest possible price each individual is willing to pay; in this case, consumer surplus is zero second degree - where firm charges different price for different quantity of good; in this case, firm rips off some of consumer surplus third degree - in this case, firm separates good into two or more different market as demand for one group of consumer is higher, or more elastic etc, than the other group of consumers. in order to exercise price discrimination, firm must have significant market power (to set prices) and is able to prevent re-selling, and also need to able to identify different consumers/group of consumers demand for the good. while dumping occurs when foreign firm trying to increase market share/eliminate domestic firms out by setting lowest price where no domestic firm will be willing to supply, hence all of the quantity will be supplied by the foreign firm. in such case, firm may initially experience losses, but in long run, it will drive other firms out of the market, hence will be a monopoly and will rip profit out of consumers.


Can a perfectly competitive firm set a price for its products that is above marginal cost?

A perfectly competitive firm would set its prices at a perfectly competitive price.


Who are some of the top discrimination lawyers in NC?

The Quinn Law Firm in Greensboro is a very well-known firm handling discrimination issues. For more suggestions, visit lawyers.com.


What kind of law firm has discrimination lawyers?

Many lawyers specialize in discrimination. Check with various firms for reffarls.


What is a firm estimate?

A firm estimate is an estimate where the buyer is not willing to negotiate the price of an item. When a seller is firm on the price, there is very little you can do.


Assume that the price of elasticity demand is -2 for a certain firm's product If the firm raises price the firm's manager can expect total revenue to?

decrease


What is price leadership by low cost firm?

Price leadership by low cost firm is what results when a firm determines the prices of services and goods within its sector.


What adjectives would you use to describe discount?

Here's a few ways to say it: Fixed Price, Firm Price, Not Negotiable, Non Negotiable price.