Author Question: Why do price discriminating firms often offer lower prices to children and elderly? (Read 63 times)

SO00 · **on:** Apr 19, 2019

Question 1

A monopolist who has a horizontal
ATC schedule and perfectly price discriminates

◦ leaves buyers a decreased but still positive amount of consumer surplus.
◦ increases the amount of consumer surplus that is lost to the buyers and not gained by the monopolist.
◦ appropriates all consumer surplus as profit.
◦ does not change the amount of consumer surplus that buyers had before the monopolist perfectly price discriminated.

Question 2

Why do price discriminating firms often offer lower prices to children and elderly?

◦ They have a lower willingness to pay than other consumers.
◦ Their demand for goods and services tends to be less elastic than other consumers.
◦ Such a strategy lowers the costs of the firm.
◦ These firms are more interested in equity than profit maximizing.

Moriaki · **Reply #1 on:** Apr 19, 2019

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SO00 · **Reply #2 on:** Apr 19, 2019

Thank you!

Moriaki · **Reply #3 on:** Apr 19, 2019

Always glad to help...