For a monopolist to practice effective price discrimination, one necessary condition is:
A) identical price elasticity among groups of buyers.
B) differences in the price elasticity of demand among groups of buyers.
C) that the product is homogeneous market.
D) none of the above.

Question

Quizplus · Accepted Answer

Effective price discrimination requires differences in the price elasticity of demand among groups of buyers. This means that some groups are willing to pay a higher price than others, and the monopolist can charge them a higher price without losing too many sales to the groups with a lower willingness to pay. If all groups had the same price elasticity, the monopolist would have to choose a single price that maximizes profits for all buyers, which would not be possible if some buyers were willing to pay more. The other choices, A and C, are not correct because they do not capture the necessary condition for effective price discrimination.

For a Monopolist to Practice Effective Price Discrimination, One Necessary