经济学essay代写：水产养殖产业外部效应
08-29, 2014
水产养殖业的外部效应
从上面的曲线图中看出，X轴表示雨天数，Y轴显示了雨伞的数量。各变量之间都存在直接关系，因为增加一个变量可以使其他变量增加。该曲线的斜率为直线。
（一）生产边界的可能性（PPF）：-
（二）从上图C点看出，生产的巧克力从5000公斤增加到10000公斤。然而，机会成本下降了13000台（85000至72000个单位）。
（三）每一千公斤的巧克力的机会成本最高的是A点和B点之间
（四）在点A处，生产0公斤巧克力和95000单位的拖拉机，在点F，生产0单位拖拉机和25000公斤的巧克力。点B，C，D和E表示使用的生产资源，给出了生产巧克力和拖拉机最大可能的组合。它们被认为是经济有效点。如在点X是无法利用的资源就被认为是经济的低效率点。
Role Of Externalities In The Aquaculture Sector Economics Essay
From the above graph, the X- axis shows number of rainy days and the Y- axis shows the number of umbrellas. There is a direct relationship between each variable because if there is an increase in one variable then even other variable increases. The slope of the curve is a straight line.
(b) (i) Possibility production frontier (PPF) :-
(ii) From the above graph at point C, production of chocolates increased from 5000 kgs to 10000 kgs. However the opportunity cost decreased by 13000 units (85000 to 72000 units).
(iii) The opportunity cost per thousand kg of chocolates is highest in between point A and point B.
(iv) At point A, zero kgs of chocolate and 95000 units of tractors are produced and at point F, zero units of tractors and 25000 kgs of chocolate is produced. Points B, C, D and E uses resources of production and gives the maximum possible combinations for both chocolates and tractors. They are considered to be economic efficiency points. As point X is unable to utilise its resources it is considered to be economic inefficiency point.
(c) (i) Graph
An increase in the income of households increases demand for mobile phone accessories (normal good). From the graph when there is a change in income demand increases from D to D?, which shifts equilibrium curve from E to E?.
(ii) Graph
The demand for new housing increases because of the decrease in the annual quota which helps the new immigrants for moving into the country. From the above graph, there is an increase in demand from B to A. If there is an increase in demand, then supply increases from to S to S?.
Form the table, Total revenue is 25 when price is $25. Total revenue increases as the price decreases. Total revenue reaches 168 i.e. maximum when price is $14
(iii) Monopoly is described as a single firm that only supplies the goods. Monopolist are said to be price makers which has a downward sloping demand curve. Price can be determined but production level may not be decided by a monopolist.#p#分页标题#e#
(iv)The outcome under perfect competition is the level of output produced by a firm when the competitive market is in equilibrium i.e. when both the marginal cost and price are equal.
Graph
From the graph in a perfect competition the firm produces the quantity of output when price equals to marginal cost. In graph (b) when marginal revenue equals to marginal cost (MR = MC) on monopolist, the price becomes greater than its marginal cost i.e P> MC. Therefore it becomes difficult for the consumers to buy the products but still monopolist increasing the output to maximise their profit.
Answer 3(a)
Externalities
Externality is a cost or gain imposed on people other than the consumers and producers of a good or service (Layton, Robinson and Tucker). An externality is a consequence of a purchase or use decision by one party on the other who do not have a choice and whose interest is not taken into consideration. For example, negative externality is pollution that has been created by some productive firms and is affecting people who have no choice and whose interest was not taken into account. Positive externality is that these firms produce the goods that are necessary for the people (like cement, steel, petrol etc).
Negative Externalities:
Negative externalities are those who effects on one party that is not directly involved in the transaction. When an individual or firm makes decision they need not pay for the full cost of decision. When a good has negative externality the consumer has to pay more for it. Consumers makes decision by seeing marginal cost equal to marginal benefit but do not take into account about negative externalities.
The best Example for negative externalities is pollution. Pollution would harm the Earth’s environment and its inhabitants in many ways like land pollution, air pollution and water pollution. For example production of polythene bags contribute to soil and water pollution. As these polythene bags cannot be disposed easily, farmers are affected when fertilizing their crops. Even the air is being polluted in many ways like persons who smoke enjoy by smoking but others are affected by passive smoking. This has a negative impact on others life because by inhaling the smoke they may be affected by lung cancer.
Another example for water pollution, consider a fish firm and chemical factory are based at same place. The chemical factory release waste water into the fish firm because of which some fishes are affected and some fishes are dead. Though the chemical factory is not directly affecting the fish firm, it indirectly causes damage to the fish firm. In this case because of the contaminated water produced by the chemical industry the fish firm has to bear the loss and the chemical factory do not take any responsibility in paying compensation to the fish firm for the loss incurred by it.#p#分页标题#e#
There are several effects of water pollution created by chemical factor some of them are
Food Damage: The chemical are released into the fish firm may turn into toxics, and these toxics are taken by the fish which in turn would be taken by humans when their meat is eaten.
Spreading of diseases: By taking such food diseases like cholera may effect. In fact, this may sometimes lead to human death.
Over all chemistry in water will be polluted: Marine food sources are contaminated or eliminated because of the polluted water.
The main motive of the companies is earning profits so they are not concerned about the other people suffering due to their actions. So the government comes into rescue to protect interested of the people who are affected by them and also protect the natural resources from diminishing.
Government has to take intervention by imposing water pollution taxes and strict monitoring is also required before allocating license for establishing the factory.
(ii) Ways to correct negative externalities:
Negative externalities have several effects. Government have to take necessary steps to eradicate these effects by
Tax: Taxes should be imposed on the industries that indirectly or directly damage other firms or companies.
Rules and regulations: Government should monitor that every industry or companies follows the rules and regulations that are required.
Pros and Cons of negative externalities
By imposing taxes on the companies which produce harmful chemicals eventually reduce the usage of threat full chemicals by the industries. It also makes the industries to take prevention or control methods. For example if a pharmaceutical company is imposed taxes for the biological harm caused by it when releasing harmful chemicals would help the manufacture of the company to take preventive steps before they release the chemicals.
By implementing rules and regulations the companies would take much care at the initial stage before continuing further. For example if a mining industry is set up with a certain rules and regulation before entering into the business would help the society by not polluting the air, water and land.
(iii) Case study- Aquaculture
Externalities play a major role in market failure. In India, commercial aquaculture is creating an issue by negative agriculture and having caused environmental impacts. Two economic effects addressed by aquaculture are
Offsite negative effects on renewable food and other coastal resources.
Onsite self pollution of shrimp ponds.
Current regulatory and land use policies are insufficient to tackle these effects. According to market analyst, India evolved from a mere subsistence industry to one of the world’s leading producer of aquaculture within a span of 10 years. In between 1994-95, India produced 82000 tonnes and became world’s second largest producer of cultured shrimp. Although aquaculture became one of the country’s largest export earning sectors, Experts believe that it is still in its infancy because out of India’s total coastal area, only 10 percent is being used. The rapid growth of this industry is contributed by its favourable climatic conditions, manpower technology and availability of natural resources.#p#分页标题#e#
Though aquaculture has become one of the leading industries and has a good support from government, recently it has faced formidable challenges from environmentalists. Rapid development of aquaculture by unscientific and unregulated methods causes environmental
damage, particularly by self polluting the shrimp ponds and Stalinisation of agricultural land and drinking water. Supreme Court banned the production of shrimp within 500mtrs of the high tide line in response to the public interest lawsuit filed by environmentalists.
Today’s trend in aquaculture is strengthening and also is increasing control over the species (World Bank, 1992). Aquaculture generates pollution through releasing organic waste and chemicals. For example some chemicals that are being used in aquaculture like antibiotics, pesticides may be having toxic effects which have a great threat to human health. Inorganic nutrients like phosphorus and nitrogen released by aquaculture ponds or cages may lead to enrichment of nutrients. However aquaculture leads to the death of fish and decline in fish quality.
The following are the some other issues of negative externality in aquaculture they are
Over exploitation: It helps in contribute to many kinds of overexploitation like affecting population of wild seed and fishmeal species for example, salmon or shrimp that require high protein feed. And this over exploitation has negative impact on humans as well.
Pollution and habitat degradation: It generates pollution by release of chemicals, and organic waste. Intensive aquaculture in costal ponds causes saltwater intrusion which substantially degrades agriculture land.
Impacts on ecosystem structure: As both farmed fish and wild fish have same food habitats sometime the farmed fish may escape and cause danger to wild fish.
Sub sectoral conflicts: There may be conflict between traditional aqua culturists who produces for local needs and commercial aqua culturists producing for export business.
Impacts on other sectors: It also affects other sectors like tourism by destroying natural scenic beauties.
Deadweight loss diagram:
This graph shows the market of aquaculture industry in which inorganic nutrients, organic waste and chemicals pollute the shrimp ponds. Inefficient equilibrium (E?) is created by the Demand and supply curve (i.e D &S?) in aquaculture industry. Aqua Industry is not paying for the damage incurred by releasing harmful chemicals and toxics. And as resources are over allocation at E? the external cost is not included at S?. If water filters are installed or if the industry pays for the damage to environment then the supply curve S? includes the external cost and economy moves towards efficient equilibrium E?.
Polices implemented by government
Business – Friendly: It helps both the commercial and traditional aquaculture to have their investments in this industry. Promotion of commercial aquaculture is also taken care by sector specified policies#p#分页标题#e#
Measures have been taken by government by passing the regulations not to over go the limit of 500mtrs of high tide line and also to take necessary steps in releasing of toxics.
(iv) Suggestion for dealing with negative externalities:
The best way we can prevent negative externalities is by not releasing harmful chemicals into the firm. The following are few more ways to prevent negative externalities they are
By not throwing trash , solvents or chemicals into drains
Avoid using fertilizers or chemicals that can easily run off into the water
Try using non toxic materials for machine cleaning
Kitty litters can be used to clean up oil and other liquids before letting it into drains.
Inspect the connections of drainage at least once in a month so that there would be no leakage in the system.
By not dumping the engine oils into the ground
And thus by following the above negative externalities may be controlled.
3(B)
Price Discrimination:
Under price discrimination, monopolist maximises profits by charging different prices to different customers or buyers. For example, Companies like Microsoft, Adobe and Apple would be offering academic versions for students and universities for a less price and the same version would be costing more for retail businesses. Even at international level there would be price discrimination for example, prices of a prescribed drug may vary from one country to another country.
Another general example for price discrimination is salons charge more for women’s haircut rather than men’s haircut because women’s have comparatively long hair rather than men. Now-a-days because of the changes in hairstyles some salons have changed their pricing according to the length of the hair and style of the haircut.
Some general examples for price discrimination:
Students given special discounts on public transports, holidays and restaurant meals.
During weekends special discounts are given for renting the cars.
Winter discounts given by restaurants to attract people.
Case study for price discrimination:
Definition of price description:
Price discrimination takes place when a firm charges different group of consumers with different price for the same good or service. It also occurs when same provider has been sold same goods or services with different prices. When the cost to supply one customer is more than the cost to supply the other and yet both are charged the same price then also it is said to be price discrimination. These situations are said to be price discrimination or discriminating monopoly. It is defined as:
"Price Discrimination is a market situation where a monopolist sells similar goods or & services at two or more different prices".#p#分页标题#e#
For Example, Electricity is being supplied by WAPDA in Pakistan with different rates for domestic consumers and commercial consumers. Another best example for price discrimination is travel industry. Travel industry can be a train, bus, ferry or airline. Whichever be the mode of transport it all comes under travel industry and these companies differentiate price very often as they sell their services and products to different markets.
For example, In India APSRTC (Andhra Pradesh State Road Transport Corporation) run by state government of Andhra Pradesh serves people by running buses. These buses are owned by state government alone and their income would be taken by government of Andhra Pradesh. Though there are private buses for certain places only these buses can be used (e.g. tirumala). People using these buses are being charged differently depending on their age group. Children below 3 years are not charged any money and children above 3 and below 6 are charged with half a price. Adults are charged differently and senior citizens are charged differently.
Consider a family consisting of two children, two adults and one senior citizen planning to visit tirumala by APSRTC Bus then there fare would vary as follows Two children ( 1 below 3 is not charged and the other above 3 is charged half the fare ) $50. Two adults each are charged at $100 each and the senior citizen would be charged around $75. Although all the members of the family are visiting the same place with the same mode of transport there fares may vary. And thus this variation is called price discrimination and APSRTC is considered to be monopoly. Giving such benefits would also bring profits to the monopoly as people would be interested to get benefited by discounts allocated to their children and parents.
The conditions that allow monopolist to practice price discrimination are
Seller must be monopolist: Price discrimination is possible in the presence of monopoly. Companies working under competitive conditions cannot differentiate between markets for example APSRTC which is monopoly that can provide service to particular areas is in a position to charge different prices. And even in the case of WAPDA which are the only producer and seller for electricity is in a position to charge in their own way.
Elasticity of demand: Monopolist must have different elasticity of demand for their products. For example, as the elasticity of demand is more the product can be charged less but if the elasticity of demand is less the monopolist product can be charged more.
Buyers should remain different: Consumer cannot purchase commodities for low price. If consumer purchases the commodities for lower price than market price then they may resell it for a higher price. For Example, if commercial consumers are also allowed to utilize electricity for domestic purpose then price discrimination is not possible.
Benefits of Price discrimination: The main benefit of price discrimination is that it helps in increasing the output and makes goods and services available to more people. The increase in competition lowers the price and gives more choice to the people.#p#分页标题#e#
从上面的曲线图中看出，X轴表示雨天数，Y轴显示了雨伞的数量。各变量之间都存在直接关系，因为增加一个变量可以使其他变量增加。该曲线的斜率为直线。
（一）生产边界的可能性（PPF）：-
（二）从上图C点看出，生产的巧克力从5000公斤增加到10000公斤。然而，机会成本下降了13000台（85000至72000个单位）。
（三）每一千公斤的巧克力的机会成本最高的是A点和B点之间
（四）在点A处，生产0公斤巧克力和95000单位的拖拉机，在点F，生产0单位拖拉机和25000公斤的巧克力。点B，C，D和E表示使用的生产资源，给出了生产巧克力和拖拉机最大可能的组合。它们被认为是经济有效点。如在点X是无法利用的资源就被认为是经济的低效率点。
Role Of Externalities In The Aquaculture Sector Economics Essay
From the above graph, the X- axis shows number of rainy days and the Y- axis shows the number of umbrellas. There is a direct relationship between each variable because if there is an increase in one variable then even other variable increases. The slope of the curve is a straight line.
(b) (i) Possibility production frontier (PPF) :-
(ii) From the above graph at point C, production of chocolates increased from 5000 kgs to 10000 kgs. However the opportunity cost decreased by 13000 units (85000 to 72000 units).
(iii) The opportunity cost per thousand kg of chocolates is highest in between point A and point B.
(iv) At point A, zero kgs of chocolate and 95000 units of tractors are produced and at point F, zero units of tractors and 25000 kgs of chocolate is produced. Points B, C, D and E uses resources of production and gives the maximum possible combinations for both chocolates and tractors. They are considered to be economic efficiency points. As point X is unable to utilise its resources it is considered to be economic inefficiency point.
(c) (i) Graph
An increase in the income of households increases demand for mobile phone accessories (normal good). From the graph when there is a change in income demand increases from D to D?, which shifts equilibrium curve from E to E?.
(ii) Graph
The demand for new housing increases because of the decrease in the annual quota which helps the new immigrants for moving into the country. From the above graph, there is an increase in demand from B to A. If there is an increase in demand, then supply increases from to S to S?.
Form the table, Total revenue is 25 when price is $25. Total revenue increases as the price decreases. Total revenue reaches 168 i.e. maximum when price is $14
(iii) Monopoly is described as a single firm that only supplies the goods. Monopolist are said to be price makers which has a downward sloping demand curve. Price can be determined but production level may not be decided by a monopolist.#p#分页标题#e#
(iv)The outcome under perfect competition is the level of output produced by a firm when the competitive market is in equilibrium i.e. when both the marginal cost and price are equal.
Graph
From the graph in a perfect competition the firm produces the quantity of output when price equals to marginal cost. In graph (b) when marginal revenue equals to marginal cost (MR = MC) on monopolist, the price becomes greater than its marginal cost i.e P> MC. Therefore it becomes difficult for the consumers to buy the products but still monopolist increasing the output to maximise their profit.
Answer 3(a)
Externalities
Externality is a cost or gain imposed on people other than the consumers and producers of a good or service (Layton, Robinson and Tucker). An externality is a consequence of a purchase or use decision by one party on the other who do not have a choice and whose interest is not taken into consideration. For example, negative externality is pollution that has been created by some productive firms and is affecting people who have no choice and whose interest was not taken into account. Positive externality is that these firms produce the goods that are necessary for the people (like cement, steel, petrol etc).
Negative Externalities:
Negative externalities are those who effects on one party that is not directly involved in the transaction. When an individual or firm makes decision they need not pay for the full cost of decision. When a good has negative externality the consumer has to pay more for it. Consumers makes decision by seeing marginal cost equal to marginal benefit but do not take into account about negative externalities.
The best Example for negative externalities is pollution. Pollution would harm the Earth’s environment and its inhabitants in many ways like land pollution, air pollution and water pollution. For example production of polythene bags contribute to soil and water pollution. As these polythene bags cannot be disposed easily, farmers are affected when fertilizing their crops. Even the air is being polluted in many ways like persons who smoke enjoy by smoking but others are affected by passive smoking. This has a negative impact on others life because by inhaling the smoke they may be affected by lung cancer.
Another example for water pollution, consider a fish firm and chemical factory are based at same place. The chemical factory release waste water into the fish firm because of which some fishes are affected and some fishes are dead. Though the chemical factory is not directly affecting the fish firm, it indirectly causes damage to the fish firm. In this case because of the contaminated water produced by the chemical industry the fish firm has to bear the loss and the chemical factory do not take any responsibility in paying compensation to the fish firm for the loss incurred by it.#p#分页标题#e#
There are several effects of water pollution created by chemical factor some of them are
Food Damage: The chemical are released into the fish firm may turn into toxics, and these toxics are taken by the fish which in turn would be taken by humans when their meat is eaten.
Spreading of diseases: By taking such food diseases like cholera may effect. In fact, this may sometimes lead to human death.
Over all chemistry in water will be polluted: Marine food sources are contaminated or eliminated because of the polluted water.
The main motive of the companies is earning profits so they are not concerned about the other people suffering due to their actions. So the government comes into rescue to protect interested of the people who are affected by them and also protect the natural resources from diminishing.
Government has to take intervention by imposing water pollution taxes and strict monitoring is also required before allocating license for establishing the factory.
(ii) Ways to correct negative externalities:
Negative externalities have several effects. Government have to take necessary steps to eradicate these effects by
Tax: Taxes should be imposed on the industries that indirectly or directly damage other firms or companies.
Rules and regulations: Government should monitor that every industry or companies follows the rules and regulations that are required.
Pros and Cons of negative externalities
By imposing taxes on the companies which produce harmful chemicals eventually reduce the usage of threat full chemicals by the industries. It also makes the industries to take prevention or control methods. For example if a pharmaceutical company is imposed taxes for the biological harm caused by it when releasing harmful chemicals would help the manufacture of the company to take preventive steps before they release the chemicals.
By implementing rules and regulations the companies would take much care at the initial stage before continuing further. For example if a mining industry is set up with a certain rules and regulation before entering into the business would help the society by not polluting the air, water and land.
(iii) Case study- Aquaculture
Externalities play a major role in market failure. In India, commercial aquaculture is creating an issue by negative agriculture and having caused environmental impacts. Two economic effects addressed by aquaculture are
Offsite negative effects on renewable food and other coastal resources.
Onsite self pollution of shrimp ponds.
Current regulatory and land use policies are insufficient to tackle these effects. According to market analyst, India evolved from a mere subsistence industry to one of the world’s leading producer of aquaculture within a span of 10 years. In between 1994-95, India produced 82000 tonnes and became world’s second largest producer of cultured shrimp. Although aquaculture became one of the country’s largest export earning sectors, Experts believe that it is still in its infancy because out of India’s total coastal area, only 10 percent is being used. The rapid growth of this industry is contributed by its favourable climatic conditions, manpower technology and availability of natural resources.#p#分页标题#e#
Though aquaculture has become one of the leading industries and has a good support from government, recently it has faced formidable challenges from environmentalists. Rapid development of aquaculture by unscientific and unregulated methods causes environmental
damage, particularly by self polluting the shrimp ponds and Stalinisation of agricultural land and drinking water. Supreme Court banned the production of shrimp within 500mtrs of the high tide line in response to the public interest lawsuit filed by environmentalists.
Today’s trend in aquaculture is strengthening and also is increasing control over the species (World Bank, 1992). Aquaculture generates pollution through releasing organic waste and chemicals. For example some chemicals that are being used in aquaculture like antibiotics, pesticides may be having toxic effects which have a great threat to human health. Inorganic nutrients like phosphorus and nitrogen released by aquaculture ponds or cages may lead to enrichment of nutrients. However aquaculture leads to the death of fish and decline in fish quality.
The following are the some other issues of negative externality in aquaculture they are
Over exploitation: It helps in contribute to many kinds of overexploitation like affecting population of wild seed and fishmeal species for example, salmon or shrimp that require high protein feed. And this over exploitation has negative impact on humans as well.
Pollution and habitat degradation: It generates pollution by release of chemicals, and organic waste. Intensive aquaculture in costal ponds causes saltwater intrusion which substantially degrades agriculture land.
Impacts on ecosystem structure: As both farmed fish and wild fish have same food habitats sometime the farmed fish may escape and cause danger to wild fish.
Sub sectoral conflicts: There may be conflict between traditional aqua culturists who produces for local needs and commercial aqua culturists producing for export business.
Impacts on other sectors: It also affects other sectors like tourism by destroying natural scenic beauties.
Deadweight loss diagram:
This graph shows the market of aquaculture industry in which inorganic nutrients, organic waste and chemicals pollute the shrimp ponds. Inefficient equilibrium (E?) is created by the Demand and supply curve (i.e D &S?) in aquaculture industry. Aqua Industry is not paying for the damage incurred by releasing harmful chemicals and toxics. And as resources are over allocation at E? the external cost is not included at S?. If water filters are installed or if the industry pays for the damage to environment then the supply curve S? includes the external cost and economy moves towards efficient equilibrium E?.
Polices implemented by government
Business – Friendly: It helps both the commercial and traditional aquaculture to have their investments in this industry. Promotion of commercial aquaculture is also taken care by sector specified policies#p#分页标题#e#
Measures have been taken by government by passing the regulations not to over go the limit of 500mtrs of high tide line and also to take necessary steps in releasing of toxics.
(iv) Suggestion for dealing with negative externalities:
The best way we can prevent negative externalities is by not releasing harmful chemicals into the firm. The following are few more ways to prevent negative externalities they are
By not throwing trash , solvents or chemicals into drains
Avoid using fertilizers or chemicals that can easily run off into the water
Try using non toxic materials for machine cleaning
Kitty litters can be used to clean up oil and other liquids before letting it into drains.
Inspect the connections of drainage at least once in a month so that there would be no leakage in the system.
By not dumping the engine oils into the ground
And thus by following the above negative externalities may be controlled.
3(B)
Price Discrimination:
Under price discrimination, monopolist maximises profits by charging different prices to different customers or buyers. For example, Companies like Microsoft, Adobe and Apple would be offering academic versions for students and universities for a less price and the same version would be costing more for retail businesses. Even at international level there would be price discrimination for example, prices of a prescribed drug may vary from one country to another country.
Another general example for price discrimination is salons charge more for women’s haircut rather than men’s haircut because women’s have comparatively long hair rather than men. Now-a-days because of the changes in hairstyles some salons have changed their pricing according to the length of the hair and style of the haircut.
Some general examples for price discrimination:
Students given special discounts on public transports, holidays and restaurant meals.
During weekends special discounts are given for renting the cars.
Winter discounts given by restaurants to attract people.
Case study for price discrimination:
Definition of price description:
Price discrimination takes place when a firm charges different group of consumers with different price for the same good or service. It also occurs when same provider has been sold same goods or services with different prices. When the cost to supply one customer is more than the cost to supply the other and yet both are charged the same price then also it is said to be price discrimination. These situations are said to be price discrimination or discriminating monopoly. It is defined as:
"Price Discrimination is a market situation where a monopolist sells similar goods or & services at two or more different prices".#p#分页标题#e#
For Example, Electricity is being supplied by WAPDA in Pakistan with different rates for domestic consumers and commercial consumers. Another best example for price discrimination is travel industry. Travel industry can be a train, bus, ferry or airline. Whichever be the mode of transport it all comes under travel industry and these companies differentiate price very often as they sell their services and products to different markets.
For example, In India APSRTC (Andhra Pradesh State Road Transport Corporation) run by state government of Andhra Pradesh serves people by running buses. These buses are owned by state government alone and their income would be taken by government of Andhra Pradesh. Though there are private buses for certain places only these buses can be used (e.g. tirumala). People using these buses are being charged differently depending on their age group. Children below 3 years are not charged any money and children above 3 and below 6 are charged with half a price. Adults are charged differently and senior citizens are charged differently.
Consider a family consisting of two children, two adults and one senior citizen planning to visit tirumala by APSRTC Bus then there fare would vary as follows Two children ( 1 below 3 is not charged and the other above 3 is charged half the fare ) $50. Two adults each are charged at $100 each and the senior citizen would be charged around $75. Although all the members of the family are visiting the same place with the same mode of transport there fares may vary. And thus this variation is called price discrimination and APSRTC is considered to be monopoly. Giving such benefits would also bring profits to the monopoly as people would be interested to get benefited by discounts allocated to their children and parents.
The conditions that allow monopolist to practice price discrimination are
Seller must be monopolist: Price discrimination is possible in the presence of monopoly. Companies working under competitive conditions cannot differentiate between markets for example APSRTC which is monopoly that can provide service to particular areas is in a position to charge different prices. And even in the case of WAPDA which are the only producer and seller for electricity is in a position to charge in their own way.
Elasticity of demand: Monopolist must have different elasticity of demand for their products. For example, as the elasticity of demand is more the product can be charged less but if the elasticity of demand is less the monopolist product can be charged more.
Buyers should remain different: Consumer cannot purchase commodities for low price. If consumer purchases the commodities for lower price than market price then they may resell it for a higher price. For Example, if commercial consumers are also allowed to utilize electricity for domestic purpose then price discrimination is not possible.
Benefits of Price discrimination: The main benefit of price discrimination is that it helps in increasing the output and makes goods and services available to more people. The increase in competition lowers the price and gives more choice to the people.#p#分页标题#e#
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