When price discrimination raises the price paid by some consumers without lowering the price paid by other consumers,
A)profit will fall
B)total revenue is constant,but profit will rise
C)total revenue will increase
D)marginal cost will increase
E)the firm is engaged in rent-seeking behavior

Question

Quizplus · Accepted Answer

Price discrimination is aimed at identifying and charging different prices to different groups of consumers based on their willingness to pay (or other characteristics that affect their demand). By doing so, the seller can extract a higher total revenue from the market. The increase in revenue may offset the potential loss in profit that comes from selling to some consumers at a lower price. Therefore, total revenue will increase as price discrimination is employed.

When Price Discrimination Raises the Price Paid by Some Consumers