📚 Learning Guide
Understanding Price Discrimination
medium

Arrange the following steps in the process of implementing price discrimination effectively in a market: A) Identify different consumer segments based on willingness to pay; B) Set different prices for each identified segment; C) Ensure that reselling between consumers is not feasible; D) Analyze the elasticity of demand for the product.

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Learning Path

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Choose the Best Answer

A

A → D → B → C

B

D → A → C → B

C

A → B → C → D

D

C → A → B → D

Understanding the Answer

Let's break down why this is correct

Answer

To implement price discrimination effectively, the first step is to identify different consumer segments based on their willingness to pay. This means figuring out who values the product more and who values it less. Next, you need to analyze the elasticity of demand for the product, which helps you understand how sensitive consumers are to price changes. After that, you can set different prices for each identified segment, ensuring that each group pays what they are willing to pay. Finally, it's important to ensure that reselling between consumers is not feasible, so that higher-paying customers cannot sell to lower-paying ones, keeping the price structure intact.

Detailed Explanation

First, you need to identify different groups of consumers based on how much they are willing to pay. Other options are incorrect because This option suggests starting with setting prices; This option starts with analyzing demand.

Key Concepts

Price Discrimination
Consumer Segmentation
Demand Elasticity
Topic

Understanding Price Discrimination

Difficulty

medium level question

Cognitive Level

understand

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