Learning Outcomes
As a result of watching this programme you should be able to:
  • Understand the meaning of the following terms: price discrimination, arbitrage, peak load pricing.
  • Be aware of the circumstances under which price discrimination is possible for firms.
  • Appreciate the problems of defining what is meant by price discrimination.
  • Assess the extent to which price discrimination is beneficial or harmful to society.
  • Average revenue: Revenue per unit of output, calculated as total revenue received for selling a product or service divided by the number of units produced.
  • Allocative efficiency: Refers to a situation in which the output of each good in an economy is at a level which reflects the preference of consumers. Marginal social cost of production will equal marginal social benefit.
  • Consumer surplus: The value of consumption of goods and services to consumers in excess of the price they have to pay to acquire them.
  • Marginal revenue: The change in total revenue received by a firm as a result of a one unit change in its output.
  • Own-price elasticity of demand: The sensitivity of demand for a good to changes in its price. Calculated as proportionate change in quantity of good A demanded divided by the proportionate change in price of good A
  • Peak load pricing: Pricing output to reflect changes in demand at certain periods of time such that prices are highest at times of peak demand. Industries using such pricing include electricity, rail travel and telecommunications.
  • Price discrimination: The practice of charging different customers different prices for the same good, made possible by the fact that different customers can be segregated into different markets and have differing elasticities of demand.
  • Price elasticity of demand: See Own price elasticity of demand.
Last modified: Monday, February 17, 2020, 7:32 PM