Explain why a firm can earn more profit by price discrimination than f

Explain why a firm can earn more profit by price discrimination than from setting a uniform price.

What will be an ideal response?

ANSWER

First, price discrimination allows a firm to charge a higher price to customers who are willing to pay more than the uniform price. The firm captures more of the consumer surplus. Second, a price-discriminating firm can sell to additional customers who were unwilling to pay the uniform price.