![]() This form of discrimination exists in the car sale industry. At this point, the seller is not in a capacity to determine who can pay what. The first degree discrimination arises when similar good are sold at different prices to different consumers (Carroll, Coates, 1999, p.55). By market segmentation, we mean the acting of splitting the market into sub markets where different prices will be charged for the same products. Price discrimination is normally separated in degrees which mainly depend on the understanding of market segmentation and the ability of consumers to pay high or a low price which is also called elasticity of demand. ![]() The economic principle behind this is called price discrimination which involves the sale of identical goods at different prices but from the same provider. In such a scenario, one customer may pay half the market price while the other will compensate this by paying double the market value (King, 1999, p.5). ![]() Surplus arises when consumers can pay more than the prevailing single market price. It also enables them to be in a capacity to extract the consumer surplus. This is so because, it enables service providers to charge the maximum price that a particular group can afford to pay within a particular. Cinemas have different charges for students, adults and the elderly. It is now a noticeable thing that cinema charges vary from one age group to another.
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