Rationality of Company in Context of Price Discrimination

Strategy damage DiscriminationIntroduction expense discrimination is a practice where a firm sells the resembling fruit to contrary customers at different determines (McDowell M. and Thom R. 2001: p.258). The rationale slow take to be discrimination is to increase revenue and profits. In read to carve up the customers by worth a firm should wager common chord conditions?The firm should be adequate to(p) to set its hurt in market. ?Consumers in low- valued market should not be able to resell the products in high hurtd market. ?Demand childs play must(prenominal) be variable (Sloman, J. 2001: p.303). There are three eccentrics of Price discriminationFirst degree Price discrimination (Perfect charge discrimination)In this type of Price discrimination different charges are charged to different customers and different prices are charged for different units of products sold to said(prenominal) customer. The maximum price that the buyer is willing to pay at a excepti onal top of time is called reservation price (Dobson, S.1998:p.176). The perfect monopolizer charges reservation price for the units he sells under(a) first degree price discrimination. Analysis of First-Degree Price DiscriminationIn first-degree price discrimination since the monopolist charges reservtion price for each unit he sells the reservation MR abridge becomes the requirement curve .The eqilibrium output is the point of intersection of demand curve and MC curve. The output the monopolist produces is OC .

The field OABC gives the integral revenue. On subtraction of costs which is the neighborhood below the orange area in the telephone number class total revenue gives the total profit which is shown by the orange ar! ea in the figure above since the monopolist charges the highest price for the product at the grumpy point of time. This type of price discrimination has two benefits?It helps the marketer to understand the consumer surplus?It helps the manufacturer to produce quantity harmonise to the demand which would improve the downslope turnover for... If you want to support a full essay, array it on our website: OrderEssay.net

If you want to get a full information about our service, visit our page: write my essay