Third degree price discrimination is defined as:
A) While rarely prosecuted, it is illegal and a misdemeanor versus a felony as defined by the Surface Transportation Board Act
B) charging different prices to different firms who use the same commodity
C) permissible only when the buyer has requested rebates
D) the least serious type of discrimination as versus first degree

Question

Quizplus · Accepted Answer

Third degree price discrimination is the practice of charging different prices to different groups of consumers for the same good or service. It is legal as long as it does not lead to market inefficiency or reduce competition. Option A is incorrect as third degree price discrimination is not illegal, rather it is a common practice in many industries. Option C is incorrect as rebates are not necessarily required for third degree price discrimination. Option D is incorrect as first degree price discrimination is the most serious type of discrimination as it involves charging each customer their maximum willingness-to-pay.

Third Degree Price Discrimination Is Defined As