If a firm wishes to engage in price discrimination,which of the following conditions must be met?
A)The demand curve must be horizontal.
B)It must be possible to prevent resale of the good from low-paying to high-paying customers.
C)The supply curve must be horizontal.
D)Many identical firms in the market must each have a small share of total industry output.
E)Price must be less than marginal cost.

Question

Quizplus · Accepted Answer

For price discrimination to be effective, it must be possible to prevent resale of the good from low-paying to high-paying customers. This is because price discrimination involves charging different prices to different groups of customers based on their willingness to pay. If customers can easily resell the good at a higher price, the firm will lose its ability to charge different prices and will not be able to engage in price discrimination. The other options listed are not necessary conditions for price discrimination.

If a Firm Wishes to Engage in Price Discrimination,which of the Following