How does price discrimination enhance a firm's revenue in a competitive market?

Price discrimination is when a company charges different prices to different customers for the same product. This strategy helps a firm increase its revenue because it allows them to capture more consumer surplus, which is the difference between what a customer is willing to pay and what they actually pay. For example, a movie theater might charge less for students and seniors while charging full price for adults. By doing this, the theater can attract more customers who might not come if they had to pay the higher price. Overall, price discrimination helps the firm make more money by tailoring prices to different groups based on their willingness to pay.