To practice third- degree price discrimination, each of these market conditions must be met except which one?
A)All consumers must have the same own price elasticity of demand.
B)The firm must have market power.
C)The firm must be able to determine in which group each customer belongs.
D)No arbitrage opportunities can exist between customer groups.

Question

Quizplus · Accepted Answer

In third-degree price discrimination, different prices are charged to different groups of customers based on their willingness to pay. Therefore, the assumption that all customers have the same own price elasticity of demand does not need to hold true. The other conditions must be met: the firm must have market power, must be able to determine which group each customer belongs to, and no arbitrage opportunities can exist between customer groups.

To Practice Third- Degree Price Discrimination, Each of These Market