Second-degree price discrimination:
A) is also known as block rate setting
B) is imperfect in the eyes of a monopolist
C) is regularly practiced by public utilities
D) is effective only in the case of services or products which are sold in easily metered units
E) all of the above

Question

Quizplus · Accepted Answer

All of the above statements are true regarding second-degree price discrimination. Second-degree price discrimination involves charging different prices based on the quantity consumed or purchased. This is also known as block rate setting, and it is regularly practiced by public utilities such as water and electricity companies. However, this method is imperfect for a monopolist as it may not capture all of the consumer surplus. It is also effective only in the case of services or products that can be easily metered, such as electricity or water.

Second-Degree Price Discrimination