How does price discrimination help us understand how many markets actually function?
A) All firms will practice price discrimination unless a government prohibits the practice.
B) Monopolistic competition is rare,so economists are able to focus in on the few firms that engage in the practice.
C) Instances of perfectly competitive markets and monopoly are rare.
D) Antidiscrimination laws are widespread,so models explaining price discrimination help us better understand markets that we are unable to witness.
E) Monopolistic competition is the most common market form,but it is the only one that does not engage in price discrimination.

Question

Quizplus · Accepted Answer

Price discrimination is common in markets where there is some level of market power, which includes both monopoly and monopolistic competition. As instances of perfectly competitive markets and pure monopoly are rare in the real world, studying price discrimination helps us better understand how many markets actually function. The other choices are not entirely accurate or applicable.

How Does Price Discrimination Help Us Understand How Many Markets