Some electric utilities offer one rate to commercial users, and a different rate to residential users.?
A. Third degree price discrimination, B. decline block pricing, C.second degree price discrimination, or D. monopoly abuse?
Answer:
I'm positive about this answer, it is third degree price discrimination. The price is set at different amounts for different consumers based on the demand at given prices by the customers (being residential and commercial in this case). The supplier is able to gather more market or producer surplus by offering a higher price for those willing to pay a higher price (commercial) and a lower price for those not willing/able to pay the higher price (residential).
Just to clarify the answer, it is not decline block pricing, it is not second degree price discrimination (nor does it have anything to do with second degree price discrimination. Second degree price discrimination is when price varies according to the quantity sold, such as "bulk" pricing), and the final answer of monopoly abuse is definitely incorrect.
price discrimination, not sure about degree
I don't know the proper answer, but I think it's probably B, because this method has stood the test of legal challenges.
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