For a monopoly to successfully price discriminate, its customers must:
A) feel that the product is a necessity.
B) have identical demands.
C) be unable to resell the product.
D) actively engage in arbitrage.

Question

Quizplus · Accepted Answer

If customers are able to resell the product, they can essentially arbitrage the price discrimination and buy the product at a lower price intended for a different group of customers and resell it to the intended group of customers at a higher price, thus eliminating the effectiveness of price discrimination. Therefore, for price discrimination to be successful, customers must be unable to resell the product.

For a Monopoly to Successfully Price Discriminate, Its Customers Must