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6 Cards in this Set
- Front
- Back
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Profit-Maximizing Output |
MR=MC |
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Price Discrimination |
Same product (same costs): 1. Charging different prices 2. Different Output |
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Conditions for Price Discrimination |
1. Firm must have market power (to set its own price) 2. Firm must have information about demand (to know type of PD). 3. Resale must be prohibited* |
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1st Degree Price Discrimination |
Charging at the maximum willingness to pay (Demand Curve) for each* customer; maximizing consumer surplus. [Max. Efficiency] |
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3rd Degree Price Discrimination |
Charging different prices to different groups of customers. They must have observable differences (i.e. Marketing Concept). |
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Marginal Revenue Slope, given Qd = a - b |
2b |
