Price Discrimination and Consumer Surplus (UMAP)

With completion of this module students will understand the concepts of price discrimination and consumer surplus. Students will also be able to: 1) find the roots of polynomial equations; 2) integrate polynomials and find the area under a curve; and 3) solve maximization problems.

Table of Contents:

1. INTRODUCTION

2. APPROXIMATION OF SUPPLY AND DEMAND
2.1 The Supply and Demand Functions
2.2 Equilibrium Price and Quantity
2.3 Continuous S and D Functions are Approximations

3. PRICE DISCRIMINATION AND CONSUMER SURPLUS
3.1 Perfect Price Discrimination
3.2 Value to the Consumer
3.3 The Consumer Surplus

4. EXAMPLES
4.1 Example 1
4.2 Example 2
4.3 Example 3

5. A THEORETICAL REMARK

6. EXERCISES

7. PRODUCER SURPLUS
7.1 Problem
7.2 Exercises 10-18

8. THE EFFECT OF THE ELASTICITIES OF SUPPLY AND DEMAND
8.1 Linear Supply and Demand Curves
8.2 Elasticities of Supply and Demand
8.3 Problem

9. TWO-TIER PRICE DISCRIMINATION AND MAXIMUM REVENUE
9.1 Two-Tier Price Discrimination
9.2 Problem: Maximizing of Revenue
9.3 Exercises

10. MODEL EXAM

11. SPECIAL ASSISTANCE SUPPLEMENT

12. SOLUTIONS TO EXERCISES

13. SOLUTIONS FOR THE MODEL EXAM