Question

Explain how consumer surplus changes when a monopoly price discriminates.

Answer 1

Answer:

Price discrimination happens when a firm charges a different price to different groups of consumers for an identical good or service, for reasons not associated with costs of supply

Answer 2

• Price discrimination is a microeconomic pricing strategy where identical or largely similar goods or services are transacted at different prices by the same provider in different markets.
• Price discrimination is distinguished from product differentiation by the more substantial difference in production cost for the differently priced products involved in the latter strategy.
• Price differentiation essentially relies on the variation in the customers' willingness to pay and in the elasticity of their demand.
• Price discrimination, very differently, relies on monopoly power, including market share, product uniqueness, sole pricing power, etc.