Why do firms practice second-degree price discrimination? a) charging a single price for every ticket is more profitable, but firms get pressure from their customers to offer group pricing- like the package prices for the concert.  b) firms can earn greater profits practicing second-degree price discrimination compared to charging a single price per ticket.

(a) U.S. pharmaceutical companies charge different prices for prescription drugs to buyers in different nations, depending on elasticity of demand and government-imposed price ceilings.  Is this acceptable?  (b) Do you agree that price discrimination is legal?

Conditions for price discrimination Price discrimination is the practice of selling the same good at more than one price when the price differences are not justified by cost differences. Evaluate the following statement: "Price discrimination is not possible when a good is sold in a perfectly competitive market." False, because perfectly competitive firms do not profit - maximize by setting marginal revenue equal to marginal cost True, because perfectly competitive firms have no market power False, because perfectly competitive firms have market power None of these choices Examples of price discrimination Cho and Ginny are debating the use of coupons by grocery stores. Cho says, "The use of coupons in grocery stores represents a means of price discrimination. It's pure and simple. Coupons do reduce the price of groceries, but mostly to people who are less likely to buy at the full price." By contrast, Ginny contends, "Coupons do not constitute price discrimination. They simply…

Explain how price discrimination increases profit.