Microeconomics · free preview
Price Discrimination
When a seller can separate buyers by willingness to pay and prevent resale, it charges each group its own price, recapturing consumer surplus, and in the perfect limit it serves every buyer down to marginal cost.
1. Same good, different prices
Same good, different prices
2. Three degrees
Three degrees
3. The surprising efficiency of the perfect case
The surprising efficiency of the perfect case
4. Where you meet it
Where you meet it
5. The requirements
A cinema considers charging students less than adults. Which conditions must hold for this price discrimination to work?
6. Perfect discrimination's surprise
A perfectly price-discriminating monopolist faces the honey buyers with willingness to pay 55, 48, 42, 35, 28 and 20 dollars, and marginal cost of 18 dollars per jar. What does it do, and what is the outcome?
7. Surplus captured
A perfectly discriminating seller faces three buyers with willingness to pay 30, 22 and 15 dollars, and marginal cost is 12 dollars per unit. Compute the total surplus it captures in dollars and write the number.
8. The arbitrage leak
An airline sells the same seat to students at 90 dollars and to business travelers at 300 dollars. What single condition most threatens this scheme?
9. The perfectly discriminating seller
A monopolist that charges every buyer exactly their willingness to pay will produce which quantity, and who keeps the surplus?
10. Harvesting every valuation
A perfectly discriminating seller faces three buyers with willingness to pay 18, 13 and 8 dollars and a constant marginal cost of 5 dollars per unit. Compute its total revenue, and write the number.
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