Price discrimination
A)may lead to greater output.
B)always leads to a reduction of output.
C)leads to lower profits for the firm.
D)causes firms to operate at a higher cost.

Question

Quizplus · Accepted Answer

Price discrimination allows firms to charge different prices based on the willingness of different consumers to pay, which can increase overall sales and therefore output. By charging higher prices to those with a higher willingness to pay, the firm can also capture more of the consumer surplus, which can increase profits. However, it is possible that price discrimination may lead to reduced output in certain circumstances, such as if the marginal cost of production exceeds the price that some consumers are willing to pay. Overall, the impact of price discrimination on output will depend on the specific market conditions and the firm's pricing strategy.

Price Discrimination