Price Discrimination Diagram. Third degree price discrimination refers to the fact that the monopolist divides his customers into two or more classes or groups charging a different price from each class of customers. A liquor company is practising third degree price discrimination and it does so because the practice is profitable.
Consider a firm that charges a single price for an apple. Third degree price discrimination is the most common type of price discrimination because classifying customers into a few groups is easier for a firm than knowing the. Remote learning solution for lockdown 2021.
The total revenue from the first segment is equal to the area p1 b q1 o.
Without price discrimination the firm charges one price 7 100 700 revenue. Total revenue 830. This is an example of third degree price discrimination. Each class is a separate market e g the balcony seats in a cinema hall the reserved seats in a cultural programme and so on.
