What is price discrimination? State under what conditions it is possible and profitable.

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What is price discrimination? State under what conditions it is possible and profitable.

A monopolist can & do charge different prices from different people. Provided they form different ‘markets’ or belong to different groups which are none competing.
The charging of different prices from different but non-competing groups of purchases is termed as price discrimination.
This may be
(a)  Personal. When different prices are charged from different persons according to their economic status. More from rich and less from poor.
(b)    Local. When different prices are charged due to change in the locality (e.g dumping) Pakistani goods in foreign countries or chir timber in Karachi and Muree will carry different prices.

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(c)   Use. e.g. Electric current is sold cheaper for industrial purpose than for domestic Conditions under which it is promoted.
1.    When there is elasticity in demand for the same commodity. The monopolist divides the demand in to series of markets according to its elasticity. He can thus charge higher prices from those who can afford to pay more and lower prices from those who are able to pay only lower prices.
2.   This is only possible if the commodities cannot be transferred from the cheaper to the dearer market.
3.   Absence of competition.
Examples.
1.    Editions of books (cheaper editions and dear editions)
2.   Doctor’s fee
3.   Railway fare I, II, III.
Profitable

          It is profitable only when the elasticity of demand difference in the market prices.
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Naeem Javid Muhammad Hassani

NJMH is working as Deputy Conservator of Forests in Balochistan Forest & Wildlife Department (BFWD). He is the CEO of Tech Urdu (techurdu.net) Forestrypedia (forestrypedia.com), Majestic Pakistan (majesticpakistan.pk), All Pak Notifications (allpaknotifications.com), Essayspedia, etc & their YouTube Channels). He is an Environmentalist, Blogger, YouTuber, Developer & Vlogger.

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