In order to be able to price- discriminate, firms need:
A)government approval.
B)competitors willing to form a cartel.
C)market power.
D)inventive economists.

Question

Quizplus · Accepted Answer

Market power refers to the ability of firms to control a significant portion of the market and influence prices. With market power, firms can price-discriminate by charging different prices for the same product to different groups of consumers in order to maximize profits. Therefore, firms need market power to engage in price discrimination. Government approval or supportive economists are not necessarily required, while forming a cartel with competitors could limit the ability to price-discriminate.

In Order to Be Able to Price- Discriminate, Firms Need