Price discrimination

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Price discrimination

Price discrimination

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  • 1. Microeconomics PriceDiscrimination
  • 2. Price DiscriminationCharging different people a different price for the same product
  • 3. Price Discrimination Make more money by capturing buyer surplus Very hard to do Keep buyers from buying low andreselling higher to other customers
  • 4. Riyadh Pizza Company Saudi Style Supreme Perfect Competition
  • 5. Riyadh Pizza Company Saudi Style Supreme Perfect Competition40 40 38 36 3430 32 30 28 262010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
  • 6. Riyadh Pizza Company Saudi Style Supreme Perfect Competition40 40 38 36 3430 32 30 Marginal Cost 28 26 292010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
  • 7. Riyadh Pizza Company Saudi Style Supreme Perfect Competition40 40 38 Keep selling as long as marginal 36 revenue is more than marginal cost 3430 32 30 Marginal Cost 28 26 292010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
  • 8. Riyadh Pizza Company Saudi Style Supreme Perfect Competition40 40 38 Keep selling as long as marginal 36 revenue is more than marginal cost 3430 32 30 Marginal Cost 28 26 292010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
  • 9. Riyadh Pizza Company Saudi Style Supreme Perfect Competition40 40 38 Keep selling as long as marginal 36 revenue is more than marginal cost 3430 32 30 Marginal Cost 28 26 292010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
  • 10. Riyadh Pizza Company Saudi Style Supreme Perfect Competition40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue30 32 30 30 Marginal Cost 28 26 292010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
  • 11. Riyadh Pizza Company Saudi Style Supreme Perfect Competition40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue30 32 30 30 Marginal Cost 28 26 292010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
  • 12. Riyadh Pizza Company Saudi Style Supreme Perfect Competition40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza20 30 -29 = 110 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
  • 13. Riyadh Pizza Company Saudi Style Supreme Perfect Competition40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza20 30 -29 = 1 Total Profit 6x1=610 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
  • 14. Riyadh Pizza Company Saudi Style Supreme Perfect Competition40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza20 30 -29 = 1 Total Profit 6x1=610 Total Revenue 6 x 30 = 180 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
  • 15. Riyadh Pizza Company Saudi Style Supreme Perfect Competition40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza20 30 -29 = 1 Total Profit 6x1=610 Total Revenue 6 x 30 = 180 Total Cost 0 6 x 29 = 174 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Cannot charge more than 30 or buyers go to competitor
  • 16. Riyadh Pizza Company Saudi Style Supreme Perfect Competition40 40 38 Keep selling as long as marginal revenue is more than marginal cost Price 36 34 Marginal Revenue30 32 30 30 Marginal Cost 28 26 29 Profit Per Pizza20 30 -29 = 1 Total Profit 6x1=610 Total Revenue 6 x 30 = 180 Total Cost 0 6 x 29 = 174 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Total Profit Cannot charge more than 30 or buyers go to competitor 180 - 174 = 6
  • 17. Riyadh Pizza Company Saudi Style SupremeMonopoly with Price Discrimination
  • 18. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 36 3430 32 30 28 262010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
  • 19. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 36 3430 32 30 Marginal Cost 28 29 262010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki
  • 20. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 36 3430 32 30 Marginal Cost 28 29 262010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 21. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 3430 32 30 Marginal Cost 28 29 262010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 22. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 3430 32 30 Marginal Cost 28 29 262010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 23. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 3430 32 30 Marginal Cost 28 29 262010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 24. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 3430 32 30 Marginal Cost 28 29 262010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 25. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 3430 32 30 Marginal Cost 28 29 262010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 26. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 3430 32 30 Marginal Cost 28 29 262010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 27. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 3430 32 30 Marginal Cost 28 29 262010 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 28. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 3430 32 30 Marginal Cost 28 29 26 Profit Per Pizza20 Varies10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 29. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 3430 32 30 Marginal Cost 28 29 26 Profit Per Pizza20 Varies Total Profit Add each profit10 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 30. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 3430 32 30 Marginal Cost 28 29 26 Profit Per Pizza20 Varies Total Profit Add each profit10 Total Revenue 210 0 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 31. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 3430 32 30 Marginal Cost 28 29 26 Profit Per Pizza20 Varies Total Profit Add each profit10 Total Revenue 210 Total Cost 0 6 x 29 = 174 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Charge different prices to different customers
  • 32. Riyadh Pizza Company Saudi Style Supreme Monopoly with Price Discrimination40 40 38 Keep selling as long as marginal revenue 36 is more than marginal cost 3430 32 30 Marginal Cost 28 29 26 Profit Per Pizza20 Varies Total Profit Add each profit10 Total Revenue 210 Total Cost 0 6 x 29 = 174 Ali Abdullah Ahmed Faisal Mohammed Mahmood Sultan Turki Total Profit Charge different prices to different customers 210 - 174 = 36
  • 33. Riyadh Pizza Company Saudi Style Supreme Monopoly Perfect Price Competition Discrimination DifferencePrice 30 30 - 40 up to 10Qty 6 6 6Total Revenue 180 210 30Total Cost 174 174 174Profit 6 36 30
  • 34. Riyadh Pizza Company Saudi Style Supreme Monopoly Perfect Price Competition Discrimination DifferencePrice 30 30 - 40 up to 10Qty 6 6 6Total Revenue 180 210 30Total Cost 174 174 174Profit 6 36 30