Individual price discrimination is used when
A)firms are dealing with individual consumers, such as in a line at the coffee shop.
B)firms cannot easily determine consumers' reservation prices.
C)firms are selling to non-local buyers.
D)salespeople are in a difficult industry, such as auto sales.

Question

Quizplus · Accepted Answer

Individual price discrimination is used when firms can determine individual consumers' reservation prices and charge them accordingly. This allows firms to capture more of the consumer surplus and increase profits. If firms cannot easily determine consumers' reservation prices, they are less likely to engage in individual price discrimination.

Individual Price Discrimination Is Used When