One of the necessary conditions for price discrimination to occur is that:
A) buyers in different markets have different elasticities of demand.
B) the demand curve is upward sloping.
C) buyers must be allowed to resell the good at a higher price elsewhere.
D) all of the above are necessary for price discrimination to occur.

Question

Quizplus · Accepted Answer

In order to implement price discrimination, buyers in different markets must have different elasticities of demand. This allows the seller to charge a higher price to customers with a lower elasticity of demand, maximizing total revenue. The demand curve being upward sloping is not a necessary condition as price discrimination can occur even in a flat or downward sloping demand curve. Allowing buyers to resell the good at a higher price elsewhere may actually prevent the seller from being able to implement price discrimination, as it would result in a more uniform market price.

One of the Necessary Conditions for Price Discrimination to Occur