Sellers can gain profits from price discrimination because
A)Charging different prices based on willingness to pay can increase revenues without increasing costs.
B)Total expenses are less with price discrimination.
C)Total revenues are maximized when all buyers pay the same price.
D)Different prices charged to different customers can lower total revenue.

Question

Quizplus · Accepted Answer

Price discrimination allows sellers to charge higher prices to buyers who are willing to pay more, while still selling to buyers who are willing to pay less. This increases revenue without increasing costs, leading to higher profits for the seller. Choice B is incorrect because the total expenses may not necessarily be less with price discrimination. Choice C is also incorrect because total revenue may not necessarily be maximized when all buyers pay the same price. Choice D is incorrect because if price discrimination is done correctly, it can actually increase total revenue.

Sellers Can Gain Profits from Price Discrimination Because