Price discrimination can occur if:
A)there are many firms in the industry,all producing the same identical good.
B)producers are price takers.
C)all consumers have the same willingness to pay for the good.
D)the market structure is monopolistic competition.

Question

Quizplus · Accepted Answer

Price discrimination occurs when a firm is able to charge different prices to different consumers for the same good or service. This is more likely to occur in a market structure with some level of market power, such as monopolistic competition, where firms have some control over price. In a perfectly competitive market with many firms producing identical goods, price discrimination would be difficult to achieve as consumers could easily purchase the good from another firm at a lower price. Therefore, options A and B are incorrect. Option C is also incorrect as price discrimination requires some consumers to have a higher willingness to pay than others, allowing firms to charge higher prices to those with a higher willingness to pay.

Price Discrimination Can Occur If