To practice effective price discrimination, a monopolist must be able to:
A) estimate its own production and cost functions.
B) avoid detection by government regulatory agencies.
C) prevent the resale of goods between groups of buyers.
D) calculate the utility level of each buyer in the market.

Question

Quizplus · Accepted Answer

Price discrimination involves charging different prices to different groups of buyers based on their willingness to pay. To effectively practice this, a monopolist must prevent the resale of goods between these groups of buyers to ensure the different prices remain in place. If buyers can easily resell the goods, the price differences would be eliminated, and the monopolist would not be able to practice effective price discrimination. The other options listed may be important for running a monopoly, but they are not essential for effective price discrimination.

To Practice Effective Price Discrimination, a Monopolist Must Be Able