Third-degree price discrimination refers to situation in which:
A)a firm charges different prices for different blocks of output.
B)a firm separates markets according to the price elasticity of demand.
C)a firm is able to charge the maximum price consumers are willing to pay for each unit of output.
D)a firm divides a market into thirds and charges each segment a different price.

Question

Quizplus · Accepted Answer

Third-degree price discrimination involves separating markets according to their price elasticity of demand, allowing the firm to charge different prices to different groups of consumers. Option A describes second-degree price discrimination, option C describes first-degree price discrimination, and option D is not a common practice in price discrimination.

Third-Degree Price Discrimination Refers to Situation in Which