From an economic perspective, price discrimination is desirable because
A) it redistributes wealth from wealthy consumers to highly innovative firms.
B) it enables firms to increase profits with no loss in economic surplus, and in turn, this could provide firms with incentives to engage in beneficial product innovation.
C) the increase in profits is more than offset by the loss in consumer surplus, resulting in a net increase in economic surplus.
D) the increase in profits results in higher corporate tax revenues received by the government which could be used to subsidize consumption for low -income individuals.

Question

Quizplus · Accepted Answer

Price discrimination allows firms to capture more consumer surplus by charging different prices to different consumers based on their willingness to pay. This can lead to increased profits without a loss in economic surplus. These higher profits can incentivize firms to innovate, potentially leading to beneficial product innovations.

From an Economic Perspective, Price Discrimination Is Desirable Because