How would I answer a 'discuss the view that price discrimination only benefits suppliers' essay question?

This question is a 25 mark question, it requires a variety of different skills and a strong structure to recieve the highest marks possible. This is a 'discuss' question therefore different arguments should be presented. In this case the question should be questioned in the opening paragraph, 'does it ONLY benefit suppliers?, the consumer should be questioned, student discounts, does it help to redistribute equity in certain situations. Along with definitions of price discrimination and examples ( train tickets, Apple, dentists) this shows the examiner that you are clear of the question and ready to present arguments whether it is true or false, never stating my opinion is, only stating fact with hints of whether you disagree or agree that links to your concluding statment. A diagram should also follow the definition, labelled correctly this picks up marks that your understanding is thorough. The diagram I would suggest is showing how price elasticity of demand is shown on the supply/demand diagram as the gradient of the demand line, for different ages or times to compare the differences. A good example would show that lower prices may be required to increase demand in the case of off peak trains, which then evens out with the cost of peak time travel as this enables sales to increase for the company. A side point to include throughout the essay is the impact on the macro economy as well as micro, as increasing total sales would suggest that the countries economy is positively impacted through a multiplier effect.

The main body of the essay should contain to the point sentences. The more direct you are the easier it is to follow your arguments and see that the point is stated, then explained then the link is made and assessed, always refering back to the question and linking to the concluding summary. This essay would likely have 3 arguments, the case that it WOULD ONLY benefit suppliers could be in a case like apple, setting prices too high and causing a barrier to entry for competition negatively affects the prices paid by the consumers. But then this could be argued that the quality and unique product of Apple makes this okay as it not a necessity good, rather a luxury one, therefore it is more of a statement of wealth. On the other hand the argument that it does benefit consumers as well as the economy can be shown. In the example of student discounts and other age price discrimiantions could be a redistribution of equity, but could also be a way of part subsiding the product being offered. Cheaper dentist costs and cheaper prices of muesums have positive externalities that younger people may then be more incentivised to use. Therefore the different arguments should be weighed up. A concluding paragraph should be clear whether you argee and to what EXTENT is important, with this question I personally would say that the situation is vital to be known as the previous arguements have shown consumers can benefit but in other examples it may be more benefical to the supplier. Therfore I would disgree with the word only and  suggest that is wordeed as: TENDS TO benefit suppliers MORE than others? 

Answered by Sianee W. Economics tutor

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