PRICE DISCRIMINATION 3
occurs in the provision of goods or services tocustomers where a firm charges varying prices to different clientsfor similar products and services. is normallyviewed at three different levels where a firm may charge customersaccording to the willingness of the customer to pay a certain price.In other words, customers are charged the maximum that they can pay(Mankiw, 2014). Secondly, customers may be divided into differentgroups say in terms of age and be charged different prices. Lastly,prices discrimination may occur in terms of the quantity wheredifferent quantities of products are charged differently.
Firms with monopoly believe that in a market there are customers whoare willing to pay more and therefore the economic sense behind pricediscrimination is to exploit the surplus in the market. It is evidentfrom research that there are always some customers who are willing topay more than the average price (Mankiw, 2014). Movie theaters andairlines may charge different prices in order to capitalize onprofits especially for customers who demand first class services orVIP tickets in the movie theater.
The price discrimination that occurs at hospitals is totallyunjustifiable since health is paramount to every person. It isevident that some hospitals will charge patients different pricesdepending on the time or age of the patient (Mankiw, 2014). Nighthospital visits are charged higher that day visits. Considering thathealth is vital to every person and it is a right, pricediscrimination in this service is extremely unjustifiable. It isunfair for patients who have little resources to be denied servicesdue to their financial status. I still hold that belief that theprice discrimination in the health sector is unfair andunjustifiable.
Mankiw, N. G. (2014). Principles of economics. Mason, OH:South-Western Cengage Learning.