The economic incentive for price discrimination is based upon
A) prejudices of business managers.
B) differences among sellers' costs.
C) a desire to evade antitrust legislation.
D) differences among buyers' elasticities of demand.

Question

Quizplus · Accepted Answer

Price discrimination occurs when a seller charges different prices to different buyers for the same product or service. The economic incentive for price discrimination is based upon differences among buyers' elasticities of demand. If a seller can identify groups of buyers with different price elasticities, they can charge higher prices to those with relatively inelastic demand and lower prices to those with relatively elastic demand. This allows the seller to capture a greater share of the total consumer surplus and increase their profits.

The Economic Incentive for Price Discrimination Is Based Upon