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Author Question: Explain why a firm can earn more profit by price discrimination than from setting a uniform price. ... (Read 89 times)

eruditmonkey@yahoo.com

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on: Jul 1, 2018
Explain why a firm can earn more profit by price discrimination than from setting a uniform price.
 
  What will be an ideal response?

Question 2

Firms price discriminate to maximize total revenue.
 
  Indicate whether the statement is true or false
Microeconomics ¦ Perloff ¦ 8th Edition
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ndhahbi

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Reply #1 on: Jul 1, 2018
Answer to Question 1

First, price discrimination allows a firm to charge a higher price to customers who are willing to pay more than the uniform price. The firm captures more of the consumer surplus. Second, a price-discriminating firm can sell to additional customers who were unwilling to pay the uniform price.

Answer to Question 2

False. Firms price discriminate to increases profit.


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