A firm cannot price discriminate if
A)its marginal revenue curve is linear for all levels of output.
B)it operates in a competitive market.
C)buyers only reveal the price they are willing to pay for the product.
D)it has a constant marginal cost.

Question

Quizplus · Accepted Answer

Price discrimination requires a firm to have some degree of market power, which means it can influence the price it charges without losing all its customers to competitors. Operating in a competitive market means the firm cannot easily raise prices for some buyers without losing business to others who pay a lower price. Therefore, choice B is the correct answer. Choices A, C, and D are incorrect because they do not necessarily prevent a firm from being able to price discriminate.

A Firm Cannot Price Discriminate If