If a firm faces a flat demand curve,
A) it cannot engage in price discrimination.
B) it can only engage in two-part tariffs.
C) it can only engage in perfect price discrimination.
D) None of the above.

Question

Quizplus · Accepted Answer

If a firm faces a flat demand curve, it means that the demand for the product doesn't change much with a change in price. This implies that the firm cannot charge different prices to different customers as they are likely to have similar willingness to pay. Therefore, price discrimination is not possible.

If a Firm Faces a Flat Demand Curve