Which of the following is TRUE about price discrimination?
A)It can only be used by monopolistic firms.
B)It is only possible if the good cannot be resold.
C)It maximizes consumer welfare since each consumer pays only what he is willing to pay.
D)All of the above are true.

Question

Quizplus · Accepted Answer

Price discrimination is the practice of charging different prices to different customers for the same product or service. It is not limited to monopolistic firms and can also be used by firms in competitive markets. However, option A is false as price discrimination can be used by any firm, not just monopolistic ones. Option C is also false, as price discrimination does not always maximize consumer welfare, as some consumers may end up paying more than others for the same product. Option B is true, as price discrimination becomes more difficult if the good can be easily resold, as this would provide an opportunity for customers who were charged a higher price to resell the product to someone who was charged a lower price.

Which of the Following Is TRUE About Price Discrimination