14_01_lec25

14_01_lec25 - 1 10 9 8 7 6 Price P 5 1 4 3 2 0 0 1 1 2 3 4...

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Unformatted text preview: 1 10 9 8 7 6 Price P 5 1 4 3 2 0 0 1 1 2 3 4 D 1 MR 1 Q 1 5 6 7 8 9 10 Quantity 10 9 8 7 6 Price 5 4 3 P 2 2 0 0 1 1 Q 2 2 3 4 MR 2 5 6 7 D 2 8 9 10 Quantity 10 9 8 7 MC 6 Price 5 4 3 2 0 0 1 1 2 3 Q T 4 5 6 7 MR(Q T ) 8 9 10 Quantity Cite as: Chia-Hui Chen, course materials for 14.01 Principles of Microeconomics, Fall 2007. MIT OpenCourseWare (http://ocw.mit.edu), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY]. 1 Third Degree Price Discrimination 14.01 Principles of Microeconomics, Fall 2007 Chia-Hui Chen November 16, 2007 Lecture 25 Pricing with Market Power Outline 1. Chap 11: Third Degree Price Discrimination 2. Chap 11: Peak-Load Pricing 3. Chap 11: Two-Part Tariff 1 Third Degree Price Discrimination Third degree price discrimination is the practice of dividing consumers into two or more groups with separate demand curves and charging different prices to each group (see Figure 1). Now maximize the profit: (a) Group 1. (b) Group 2. (c) Total Market. Figure 1: Third Degree Price Discrimination....
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14_01_lec25 - 1 10 9 8 7 6 Price P 5 1 4 3 2 0 0 1 1 2 3 4...

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