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Price discrimination

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Gale Pooley
Gale Pooley

Price discrimination

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Microeconomics Price Discrimination
Price Discrimination Charging different people a different price for the same product
Price Discrimination Make more money by capturing buyer surplus Very hard to do Keep buyers from buying low and reselling higher to other customers
Riyadh Pizza Company Saudi Style Supreme Perfect Competition
Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 36 34 30 32 30 28 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 36 34 30 32 30 Marginal Cost 28 26 29 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal 36 revenue is more than marginal cost 34 30 32 30 Marginal Cost 28 26 29 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal 36 revenue is more than marginal cost 34 30 32 30 Marginal Cost 28 26 29 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal 36 revenue is more than marginal cost 34 30 32 30 Marginal Cost 28 26 29 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue 30 32 30 30 Marginal Cost 28 26 29 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue 30 32 30 30 Marginal Cost 28 26 29 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue 30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza 20 30 -29 = 1 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue 30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza 20 30 -29 = 1 Total Profit 6x1=6 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue 30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza 20 30 -29 = 1 Total Profit 6x1=6 10 Total Revenue 6 x 30 = 180 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue 30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza 20 30 -29 = 1 Total Profit 6x1=6 10 Total Revenue 6 x 30 = 180 Total Cost 0 6 x 29 = 174 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue 30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza 20 30 -29 = 1 Total Profit 6x1=6 10 Total Revenue 6 x 30 = 180 Total Cost 0 6 x 29 = 174 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Total Profit Cannot charge more than 30 or buyers go to competitor 180 - 174 = 6
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 36 34 30 32 30 28 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 36 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 36 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 Profit Per Pizza 20 Varies 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 Profit Per Pizza 20 Varies Total Profit Add each profit 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 Profit Per Pizza 20 Varies Total Profit Add each profit 10 Total Revenue 210 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 Profit Per Pizza 20 Varies Total Profit Add each profit 10 Total Revenue 210 Total Cost 0 6 x 29 = 174 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 Profit Per Pizza 20 Varies Total Profit Add each profit 10 Total Revenue 210 Total Cost 0 6 x 29 = 174 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Total Profit Charge different prices to different customers 210 - 174 = 36
Riyadh Pizza Company Saudi Style Supreme Monopoly Perfect Price Competition Discrimination Difference Price 30 30 - 40 up to 10 Qty 6 6 6 Total Revenue 180 210 30 Total Cost 174 174 174 Profit 6 36 30
Riyadh Pizza Company Saudi Style Supreme Monopoly Perfect Price Competition Discrimination Difference Price 30 30 - 40 up to 10 Qty 6 6 6 Total Revenue 180 210 30 Total Cost 174 174 174 Profit 6 36 30

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Price discrimination

  • 1. Microeconomics Price Discrimination
  • 2. Price Discrimination Charging different people a different price for the same product
  • 3. Price Discrimination Make more money by capturing buyer surplus Very hard to do Keep buyers from buying low and reselling higher to other customers
  • 4. Riyadh Pizza Company Saudi Style Supreme Perfect Competition
  • 5. Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 36 34 30 32 30 28 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
  • 6. Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 36 34 30 32 30 Marginal Cost 28 26 29 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
  • 7. Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal 36 revenue is more than marginal cost 34 30 32 30 Marginal Cost 28 26 29 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
  • 8. Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal 36 revenue is more than marginal cost 34 30 32 30 Marginal Cost 28 26 29 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
  • 9. Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal 36 revenue is more than marginal cost 34 30 32 30 Marginal Cost 28 26 29 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
  • 10. Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue 30 32 30 30 Marginal Cost 28 26 29 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
  • 11. Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue 30 32 30 30 Marginal Cost 28 26 29 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
  • 12. Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue 30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza 20 30 -29 = 1 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
  • 13. Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue 30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza 20 30 -29 = 1 Total Profit 6x1=6 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
  • 14. Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue 30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza 20 30 -29 = 1 Total Profit 6x1=6 10 Total Revenue 6 x 30 = 180 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
  • 15. Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue 30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza 20 30 -29 = 1 Total Profit 6x1=6 10 Total Revenue 6 x 30 = 180 Total Cost 0 6 x 29 = 174 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
  • 16. Riyadh Pizza Company Saudi Style Supreme Perfect Competition 40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue 30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza 20 30 -29 = 1 Total Profit 6x1=6 10 Total Revenue 6 x 30 = 180 Total Cost 0 6 x 29 = 174 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Total Profit Cannot charge more than 30 or buyers go to competitor 180 - 174 = 6
  • 17. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination
  • 18. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 36 34 30 32 30 28 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
  • 19. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 36 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
  • 20. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 36 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 21. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 22. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 23. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 24. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 25. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 26. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 27. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 20 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 28. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 Profit Per Pizza 20 Varies 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 29. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 Profit Per Pizza 20 Varies Total Profit Add each profit 10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 30. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 Profit Per Pizza 20 Varies Total Profit Add each profit 10 Total Revenue 210 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 31. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 Profit Per Pizza 20 Varies Total Profit Add each profit 10 Total Revenue 210 Total Cost 0 6 x 29 = 174 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 32. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination 40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 34 30 32 30 Marginal Cost 28 29 26 Profit Per Pizza 20 Varies Total Profit Add each profit 10 Total Revenue 210 Total Cost 0 6 x 29 = 174 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Total Profit Charge different prices to different customers 210 - 174 = 36
  • 33. Riyadh Pizza Company Saudi Style Supreme Monopoly Perfect Price Competition Discrimination Difference Price 30 30 - 40 up to 10 Qty 6 6 6 Total Revenue 180 210 30 Total Cost 174 174 174 Profit 6 36 30
  • 34. Riyadh Pizza Company Saudi Style Supreme Monopoly Perfect Price Competition Discrimination Difference Price 30 30 - 40 up to 10 Qty 6 6 6 Total Revenue 180 210 30 Total Cost 174 174 174 Profit 6 36 30

Notes de l'éditeur

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