Price+Discrimination

=Price Discrimination:= Price discrimination occurs when a monopoly tries to charge each person the most they're willing to pay for something. In order for price discrimination to be effective three requirements must be met: the monopoly must be the only industry producing said product, they must have market segregation- charging certain people or groups of people different prices, and there must be no ability to resell products. Examples of price discrimination include charging different airline fares, senior citizen discounts, hardcover vs paperback books, and different movie prices for different age groups and at different times.

Price discrimination has three very obvious effects. First off, when a monopoly used price discrimination it completely destroys ALL consumer surplus. Secondly, it results in more economic profit for the monopolist since they take all consumer surplus. Lastly, price discrimination results in allocative efficiency.

In a price discriminating monopoly all consumer surplus is taken by the monopoly as economic profit.    An example of price discrimination is when airlines charge different airfares.

Links
http://www.wisegeek.com/what-is-price-discrimination.htm http://tutor2u.net/Economics/revision-notes/a2-micro-price-discrimination.html http://www.nowsell.com/marketing-guide/price-discrimination.html

Question:
Do movie theaters on some level partake in price discrimination?

Answer:
Yes, they charge different prices to different age groups and also charge different prices for different days of the week/time of day.