Which of the following is true regarding price discrimination? i. It converts consumer surplus to economic profit.
Ii) A price discriminator must be a monopoly.
Iii) To be able to price discriminate, the firm must be able to identify different types of buyers.
A) ii and iii
B) i and iii
C) i and ii
D) i, ii and iii
E) ii only

Question

Quizplus · Accepted Answer

Statement i is true as price discrimination allows the firm to capture consumer surplus and turn it into economic profit. Statement ii is false as firms can practice price discrimination without being a monopoly. Statement iii is true as the firm needs to identify and differentiate between different types of buyers to be able to charge different prices. Therefore, options A, C, and D are incorrect. The correct answer is B, as it correctly identifies the true statements about price discrimination.

Which of the Following Is True Regarding Price Discrimination? I