Economics Price Discrimination Questions
Group price discrimination is a pricing strategy where a seller charges different prices to different groups of customers for the same product or service. This strategy is based on the idea that different groups of customers have different price elasticities of demand, meaning their willingness to pay varies. By segmenting customers into groups based on factors such as age, income, location, or membership, sellers can maximize their profits by charging higher prices to customers who are willing to pay more and lower prices to customers who are more price-sensitive. Group price discrimination allows sellers to capture a larger portion of consumer surplus and increase overall revenue.