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Question
With the help of an example explain the meaning of price discrimination.
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Solution
The act of selling the same product at different prices to different buyers is known as price discrimination. A monopolist can charge different prices from his different buyers easily. If a monopolist adopts a policy of price discrimination, the situation is called a discriminating monopoly.
Example:
- Indian Railways charge lower fares from senior citizens of the country as compared to other citizens.
- Electricity boards sell electricity at cheaper rates for agricultural use than for domestic use.
RELATED QUESTIONS
Define Discriminating Monopoly.
Which two forms of market earn normal profit in the long run?
Selling costs are absent in perfect competition market.
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Price discrimination
Identify the market form from the following:
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