1. KRUGMAN'S MICROECONOMICS for AP* Price Discrimination Margaret Ray and David Anderson Micro: Econ: 27 63 Module

2. What you will learn in this Module : The meaning of price discrimination. Why price discrimination is so prevalent when producers have market power.

3. What is Price Discrimination? Charging different price to different consumers for the same product.

4. Price Discrimination Lenny’s is a local restaurant famous for their “Slam Grand” breakfasts. There are only two market segments that enjoy the Slam Grand: senior citizens and college students. Assume that: 1) Lenny’s MC=$2 2) There are 100 seniors willing to pay $4. 3) There are 100 college students willing to pay $8.

5. Elasticity and Price Discrimination Why are some consumers not as willing or able to pay for a product? Hint: It has to do with differences in price elasticity of demand.

6. Perfect Price Discrimination Perfect price discrimination: each consumer is charged exactly his/her maximum willingness to pay.