Work through the list without notes. If you cannot do a statement, follow its link, then come back. Guide = study guide; Practice = practice questions.
Understanding
- I can define price discrimination and tell it apart from a price difference caused by a cost difference. (Guide: “What price discrimination is”)
- I can state the three conditions a firm needs: market power, a way to identify buyers, and a way to stop resale. (Guide: “The three conditions”; Practice Q1)
- I can explain why a perfectly competitive firm cannot price discriminate. (Guide: “The three conditions”)
- I can explain why the group with less elastic demand pays the higher price. (Guide: “Who pays more”; Practice Q3, Q6)
- I can explain why MR equals demand under perfect price discrimination. (Guide: “Perfect price discrimination”; Practice Q7)
Calculation and graphing
- I can find the single-price monopoly quantity, price and profit, reading the price from demand. (Guide: Worked example 1; Practice Q5)
- I can calculate consumer surplus, profit and deadweight loss for a single-price monopolist and for a perfectly price-discriminating one. (Guide: Worked example 1; Practice Q4, Q5)
- I can find the profit-maximising price for each group with MR = MC in each market, and compare total profit with a single price. (Guide: Worked example 2; Practice Q6)
- I can draw a labelled graph showing a single-price monopoly and then perfect price discrimination, with the right areas shaded. (Guide: Figures 1 and 2; Practice Q5)
Reasoning
- I can explain why perfect price discrimination is allocatively efficient but leaves consumers with no surplus. (Guide: “Perfect price discrimination”; Practice Q2, Q7)
- I can explain which buyers gain and which lose when a firm moves from a single price to group pricing. (Guide: Worked example 2, Interpretation)
- I can give practical reasons why perfect price discrimination is rare. (Practice Q7)
All ticked? Move on to Topic 4.4: Monopolistic Competition, or return to the course roadmap.