One necessary condition for effective price discrimination is:
A) identical tastes among buyers.
B) difference in the price elasticity of demand among buyers.
C) a single, homogeneous market.
D) two or more markets with easy resale of products between them.

Question

Quizplus · Accepted Answer

Effective price discrimination requires the ability to charge different prices to different customers based on their willingness to pay. This willingness to pay is often determined by the price elasticity of demand, meaning that different customers will have different responses to changes in price. Therefore, a difference in the price elasticity of demand among buyers is a necessary condition for effective price discrimination. Identical tastes among buyers (A) would make it difficult to differentiate willingness to pay, and a single, homogeneous market (C) would make it difficult to target different customer segments. Easy resale of products between markets (D) could actually limit the ability to charge different prices in each market.

One Necessary Condition for Effective Price Discrimination Is