With third-degree price discrimination:
A)the firm tries to price each unit at the consumer's reservation price.
B)the firm offers consumers a quantity discount.
C)the firm charges different consumer groups or market segments a different price.
D)a buyer can only purchase one product by agreeing to purchase some other product as well.

Question

Quizplus · Accepted Answer

With third-degree price discrimination, the firm charges different prices to different consumer groups or market segments. This allows the firm to capture additional consumer surplus and increase profits. The prices charged in each segment are based on the elasticity of demand for that segment, with higher prices charged to groups with lower elasticity and vice versa. This strategy is often used by businesses that sell products or services that appeal to different demographics or income levels. Third-degree price discrimination involves charging different prices to different consumer groups or market segments based on their willingness to pay. This allows the firm to capture more consumer surplus and increase profits. This method is commonly used in markets where consumers can be easily segmented based on characteristics such as age, income, or location.

With Third-Degree Price Discrimination