Question

g True or False and then Explain: Firm profits are always higher if the firm can engage in third degree price discrimination than if it has to charge different groups the same price.

Answer 1

true

Step-by-step explanation:

Price discrimination is when the same product is sold at different prices to customers in different markets

types of price discrimination

1. first degree price discrimination : here sellers charge each consumer at their willingness to pay in order to eliminate consumer surplus.

2. second degree price discrimination : here firms offer different prices depending on the quantity purchased. e.g. giving discounts for bulk purchases.

3, third degree price discrimination : firms charge different prices to different groups of customers. e.g. having a certain price for senior citizens, students

If a company charges different prices to different groups, they would be charging at prices customers would be willing to pay