To practice effective price discrimination, a firm must have:
A) identical tastes among buyers.
B) differences in demand elasticity among buyers.
C) identical demand elasticities among buyers.
D) two or more markets with no economic restrictions between them.

Question

Quizplus · Accepted Answer

Effective price discrimination requires differences in demand elasticity among buyers. This allows the firm to set different prices for different segments of consumers based on their willingness and ability to pay. Identical tastes or demand elasticities among buyers would not allow for effective price discrimination, and economic restrictions (such as regulatory barriers preventing the firm from entering a different market) could also limit the firm's ability to engage in price discrimination.

To Practice Effective Price Discrimination, a Firm Must Have