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Price discrimination is a pricing strategy whereby a firm's prices for the same or very similar goods vary for customers in different markets. This can help the firm attain more profits compared to charging a single price. For example, a movie theather may offer a discount to students but charge non-studnets a higher price. Suppose you are a consultant to American Airlines. How would you use price discrimination to get the most profits from your customers? Use the concepts such as total revenue, marginal revenue, total cost and marginal cost, and the theory of profit maximization to argue your strategy.
1) Do you have to be a monopoly to engage in price discrimination? Explain.
2) How one would use price discrimination to get the most profit from customers? Explain.
3) Explains why one does or does not have to be a monopoly to engage in price discrimination.
4) Presents a strategy argument that includes the concepts of total revenue, marginal revenue, total cost and marginal cost, and the theory of profit maximization.
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