What three conditions must be present before a company can price discriminate?
A)The company has market power; the product is homogeneous; the demand is elastic.
B)The product cannot be resold; consumers have differing willingness to pay; there are many sellers.
C)The company can identify how much each customer is willing to pay; the product cannot be resold; the company has market power.
D)Product demand is highly elastic; the company can identify how much each customer is willing to pay; the company is seeking market power.

Question

Quizplus · Accepted Answer

In order for a company to price discriminate, it must have market power, be able to identify how much each customer is willing to pay, and the product cannot be easily resold. Option A is incorrect because the product can be differentiated or homogeneous, it doesn't have to be homogeneous. Option B is incorrect because having many sellers would make it challenging for one company to implement price discrimination. Option D is incorrect because a highly elastic demand would make it difficult for a company to charge different prices to different consumers.

What Three Conditions Must Be Present Before a Company Can