A Price Discrimination and a Single-Pricing Strategy Essay

A Price Discrimination and a Single-Pricing Strategy - Essay warningInstead of charging a uniform price to everyone, the cable TV go with terminate think in terms of charging the customers with respect to the number of paid impart they would similar to watch. For some customers whitethorn not like sports channels and some others may not like movie channels. The cable TV company can think in terms of allowing the customers to select the channels they would like to watch and based on that the company can decide the prices of the service. Thus customers will get much more flexibility in selecting channels and controlling their budget for watching television channels. At the same time, it should be noted that the cable TV company may not lose any revenue since more customers will come frontwards to purchases such services because of the increased flexibility in selecting channels. In a perfectly competitive market, sellers may not get the freedom to fix the price. If they set a pri ce above the market price, nonexistence will buy their result in a competitive market. In short, they will get provided a normal profit in the long cause. Some rigids may fix higher prices for their products if the competitor is less. Such firms will get abnormal profits in the short run. The abnormal profit realise by a single firm in a market will encourage other forms to enter the market and therefore supply will increase and the price would come down. Long run average cost curves represent the economies of scale and diseconomies of scale as far as a firm is concerned. Economies of scale mean the ability of a firm to reduce the unit price of a product with the help of bulk production.