Under what conditions can a firm sell the same product at different prices?

This is a clear example of price discrimination, which can be defined as when sales of identical goods or services are transacted at different prices from the same provider. This would not exist in monopolistic competition or in a free market, as in both cases each business has no individual power. However, this should theoretically exist in a monopoly firm, as they are "price-makers" and control the market for that good/service, and can decide to sell at higher prices for consumers who are willing to pay more. Price discrimination can reduce efficiency by miss-allocating output among consumers, but can also be viewed as biased and unfair. A classic example of price discrimination is the different values of cinema seat tickets for children, students, adults and elderly people.

AT
Answered by Anita T. Economics tutor

2900 Views

See similar Economics IB tutors

Related Economics IB answers

All answers ▸

Explain the concept of price elasticity of demand? How does one calculate it? What is the relationship between price elasticity of demand and firms’ total revenue?


State the key assumptions and characteristics of a competitive market and outline the difference between the short-run and the long-run.


Describe a negative externality of consumption and explain a method the government can impose to reduce it. Give examples.


What are the determinants of price elasticity of demand?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning