1.

The different pricing conditions that can be adopted in a competitive market are
Price Discrimination, Two-Part Pricing, Block Pricing, and Competitive Bundling.
Price Discrimination involves pricing the same goods and services differently. It is
classified into three: First-Degree or Perfect Price Discrimination, Second-Degree Price
Discrimination and Third-Degree Price Discrimination.
Under the Perfect Price Discrimination, the consumer is charged a different and
maximum possible price for every unit consumed. The Second-Degree Price
Discrimination involves charging different prices according to quantity purchased. The
Third-Degree Price Discrimination charges different group of consumers differently, such
as providing discounts for students.
Two-Part Pricing consists of a fixed entry price and an additional fee that varies
with usage or consumption. For example is credit card. A cardholder pays a fixed annual
fee and an additional fee for every transaction using the card.
Block Pricing involves making customers choose either to buy all or buy none by
packaging identical products as one to enhance their profits. For example is paper: a
package consisting one-whole pad paper, ½ lengthwise and crosswise pad papers, and
¼ pad paper.
Commodity Bundling involves bundling two or more products then pricing it as a
whole. An example is travel packages.

2. Yes. These pricing conditions can maximize firm’s profit as long as the marginal
revenue exceeds marginal cost. For example, price discrimination is enforced in order
for firms to make the most revenue possible from every customer by allowing
themselves to charge at prices relative to the consumers’ ability and willingness to pay.
In two-part pricing, the firm can increase profits by charging a price close to marginal
cost and an entry fee. In block pricing, they can maximize their profit by taking
advantage of the economies of scale, which allow them to produce large quantities at a
lower cost. In this way, the revenue would be even higher; especially as the products
are being sold in a package, customers will tend to buy at that favorable price for firms
rather than buy none at all. Lastly, in commodity bundling, firms can charge an average
price per unit equal to the average willingness of the consumers to pay.