The following table shows the utility (measured in dollars)which Lisa derives from water (in 50 litre drums)and diamonds (uncut 1 carat stones).

-What is price discrimination?
A)The selling of different products to the same customer at different prices.
B)The selling of an identical product to different customers at the same price.
C)The selling of an identical product to different customers at different prices.
D)The selling of different products to different customers at different prices.

Question

The following table shows the utility (measured in dollars)which Lisa derives from water (in 50 litre drums)and diamonds (uncut 1 carat stones).
 
-What is price discrimination?
A)The selling of different products to the same customer at different prices. 
B)The selling of an identical product to different customers at the same price. 
C)The selling of an identical product to different customers at different prices. 
D)The selling of different products to different customers at different prices.

Quizplus · Accepted Answer

Price discrimination is the selling of an identical product to different customers at different prices. In this scenario, Lisa is willing to pay different amounts for water and diamonds, which shows that she derives different levels of utility from each product. If a seller charges Lisa a different price for water and diamonds based on her varying levels of utility, that would be an example of price discrimination.

The Following Table Shows the Utility (Measured in Dollars)which Lisa