Third Degree Price Discrimination

Firms that charge different prices to different consumers based on the consumer group's price elasticity of demand are practicing third degree price discrimination, a very common practice among firms with market power. This lesson introduces and provides a graphical analysis of third degree price discrimination
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[@adrienjorris]

Hi Jason. Great video. Thanks for the explanation. I have one question though: why doesn't the ski lift sell adult tickets at quantity and price where MC = MR for adults ? Isn't it where its profit is maximized with them ? Do they make more profit with the adults at Qa/Pa than at the intersection between MR adults and MC ?

[@trppmdm]

I think I can answer your question.
You can't just assume MC = MR for adults and teens individually, find quantities x for adults and y for teens and charge the monopolist price, since you're producing the same good, and that means the marginal cost curve is shared. Producing x + y tickets has a different cost from producing x tickets plus producing y tickets.

[@rawanmahmood914]

@@trppmdm so from what you are saying, this graph represents an oligopoly market rather than a monopoly?

[@trppmdm]

@@rawanmahmood914 The graph was built assuming a monopoly. You can imagine this as the ski tracks being owned by a single company, so there's no competition.

[@rawanmahmood914]

@@trppmdm oh okay this makes sense, thank you so much!

[@dawnmccrickard1481]

Thank you so much for this video you helped me out so much. I am an older student attempting to finish my BS in Business after taking a long break to raise a family with three grown boys with college degrees.

[@bharatsinghshekhawat2279]

Very nicely explained, everything got crystal clear . The other videos on TH-cam for Price Discrimination not make it clear that how profit is going to affect from third degree price Discrimination but you explained it nicely with the help of diagram and using different colors. 👌👌

[@shubhirocksify]

wouldnt the marginal cost be a factor ? say you've sold tickets to children at a certain quantity then if i sell tickets to adults my marginal cost would start from where the quantity of tickets sold to adults is , thus changing my mc right ?

[@rout89]

Dear Walker, I don't understand why the yellow-colored area overflows beyond the amount of Q_t ? Why we take the adults into consideration for the price of P_t when we determine the profit from teenagers?

[@lettucekim]

the yellow area represents the amount of profit earned if we are only allowed to choose one price for both teens and adults, that's why we can only have one price that takes the elastic demand of teens into account.

[@31sultanazismisbahi31]

Why should first we have to find the quantity for adultnot teenager ?

[@potofcandies]

Hi Jason, may I know why is the market AR and MR curves are steep for the top half and gradual in the bottom half? Does the tip of the market MR and AR correspond to the tip of the good with lower ped while the kinked vertex corresponds to market where the good has higher ped??

[@nokuphilashange2304]

thanks for making me dance before the lesson starts, it gives me energy and make me look more forward to learning the concept

[@bitknowledge.2493]

Thanks....love from India

[@danrivolta1140]

JASON YOU ARE A MYTH

[@visionies7713]

Very helpful lecturer

[@vyshniishwaran5580]

What is the song? I've been looking for it EVERYWHERE!

[@adrienjorris]

Making Me Nervous, from Brad Sucks

[@vyshniishwaran5580]

thank you so much!!!!

[@adrienjorris]

You're very welcome.

[@gunchabhatia9135]

Thankyou sir!

[@willianpablo3071]

Man I love this music haha

[@Thisisahandle701]

ONE STEP AT A TIME na na na na na na

[@adrienjorris]

Making Me Nervous, from Brad Sucks

[@apoorvgupta8341]

Thanks for the video sir . Helps a lot😍

[@sidsilver3222]

Hello Brown Curry Uncle

[@adrienjorris]

Who unliked this video ? WHO ???

[@sidsilver3222]

Ur Mom