Price discrimination allows the firm to
A) segment the market and thereby capture consumer surplus
B) create excess demand which will force price upward
C) shift the equilibrium price to eliminate price competition among discriminating buyers
D) behave like a monopolist
E) select a small set from among its customers in order to charge the highest price possible

Question

Quizplus · Accepted Answer

Price discrimination involves charging different prices to different groups of consumers for the same product, based on their willingness to pay. This strategy allows firms to segment the market and capture more consumer surplus by charging each segment a price closer to their specific valuation of the product.

Price Discrimination Allows the Firm to