In order to engage in price discrimination, a firm must be:
A) a price setter.
B) able to prevent resale by the customers charged a lower price.
C) able to segment the market.
D) All of the above are true.

Question

Quizplus · Accepted Answer

In order to engage in price discrimination, the firm must be a price setter as it needs to have the ability to set different prices for different segments of the market. It also needs to be able to segment the market, which means identifying different groups of customers with different price elasticities of demand. Finally, the firm needs to prevent resale by the customers charged a lower price to ensure that the lower prices do not attract customers from the higher-priced segment.

In Order to Engage in Price Discrimination, a Firm Must