Economics Price Discrimination Questions
Third-degree price discrimination is a pricing strategy where a seller charges different prices to different groups of customers based on their willingness to pay. This type of price discrimination involves dividing the market into distinct segments and charging different prices to each segment. The seller aims to maximize profits by charging higher prices to customers with a higher willingness to pay and lower prices to customers with a lower willingness to pay. This strategy is commonly used in industries such as airlines, where different prices are offered to business travelers and leisure travelers.