ECON 102 Chapter Notes - Chapter 22: Price Discrimination, Market Power, Economic Surplus

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20 Jan 2017
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ECON 102 Full Course Notes
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ECON 102 Full Course Notes
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Don"t have to charge same price to all buyers and can charge them based on how much they are willing to pay. One way you can find out how much each buyer is willing to pay is to negotiate a price for each buyer. Ex: coupons in newspapers and email (buyers who go through the effort of bringing in the coupon have a lower willingness to pay), happy hours, college student discounts, end of season clothing sales. Ex: different pricing according to quantity of goods purchased. The answer is d) because when a firm is able to charge exactly what consumers are willing to pay, this is perfect price discrimination. With price discrimination, some people may pay more than without but they will still buy the item because the price with price discrimination isn"t greater than what they are willing to pay. But with price discrimination, people who can"t afford it without it, are able to buy the product.

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