The Pros And Cons Of Price Discrimination

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PRICE
Price is any amount which a customer is ready to pay to the supplier in order to purchase goods and services and the supplier is willing to receive for a good and service. For example, in making of an ice cream some sort of expenditure is being used so the supplier will charge that sum of money from its customer. This can be represented by Demand and Supply graph. The price selected on which the good will be sold and purchased is decided through equilibrium point.

DEMAND SUPPLY

EQUILIBRIUM POINT

PRICE DISCRIMINATION

Price Discrimination is also known as Price Differentiation. It is a pricing policy where homogenous products or similar products (rice, wheat, fruits, vegetables etc) are executed at different prices by the same supplier in different areas or location. For example, the price of dozen of bananas is Rs. 100 in Karachi while the price in Sukkur might be Rs. 70. It is a practice of charging different prices to different consumers for a homogenous product. These differences are caused due to

difference in production cost while producing/processing goods and the willingness and ability of the consumers to pay.
It is a strategy through which the producers can gain every single penny that a consumer can pay for the products. This leads to companies earning abnormal profits instead of

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