With perfect price discrimination CS is equal to zero since the monopoly is able to capture all of the consumer surplus with its pricing policy. PS is equal to the area under the demand curve and above the supply curve or PS = (1/2)($1000 per unit – $100 per unit)(450 units) = $202,500.

The well-being of society is maximized. Consumer surplus is the buyers’ willingness to pay for a good minus the amount they actually pay for it. Consumer surplus measures the benefit buyers get from participating in a market (in $). selling a good minus their opportunity cost of production.

To correctly analyze the welfare effects of free trade on an economy, economists must assume: That the country is a price taker. When technology improves in the ice cream industry, what happens to consumer surplus? It increases.

Second-degree price discrimination involves charging consumers a different price for the amount or quantity consumed. Examples include: A phone plan that charges a higher rate after a determined amount of minutes are used. Reward cards that provide frequent shoppers with a discount on future products.

Two common examples of indirect price discrimination are coupons and quantity discounts. Quantity discounts are discounts for buying more. Thus, the large size of milk, laundry detergent, and other items often cost less per unit than smaller sizes, and the difference is greater than the savings on packaging costs.

The principal part of predatory pricing is the operator in the seller’s market, and the operator has certain economic or technical strength. This feature distinguishes it from price discrimination, which includes not only competition between sellers but also competition among buyers.