Price Discrimination � First, Second And Third Degree:
Economics notes
Price Discrimination � First, Second And Third Degree:
➡️ Revenue maximisation is the process of increasing a company's profits by increasing the amount of revenue it generates.
➡️ This can be achieved by increasing the price of goods and services, increasing the number of customers, or increasing the number of products and services offered.
➡️ It is important to ensure that the costs associated with increasing revenue are not greater than the additional revenue generated, as this could lead to a decrease in profits.
What is price discrimination?
Price discrimination is a pricing strategy where a company charges different prices for the same product or service based on the customer's ability to pay. This can be done in three different ways first-degree price discrimination, second-degree price discrimination, and third-degree price discrimination.
What is first-degree price discrimination?
First-degree price discrimination is a pricing strategy where a company charges each customer the maximum price they are willing to pay for a product or service. This allows the company to maximize its profits by charging each customer the highest price they are willing to pay.
What is third-degree price discrimination?
Third-degree price discrimination is a pricing strategy where a company charges different prices for the same product or service based on the customer's demographic characteristics, such as age, gender, or location. This allows the company to maximize its profits by charging different prices to different customer segments.