Why is price discrimination legal but not discrimination based on race or gender?
A)because price discrimination increases profits and therefore tax revenues for the government, but discrimination based on race or gender reduces tax revenues
B)because price discrimination reduces deadweight loss, but discrimination based on race or gender increases deadweight loss
C)because price discrimination involves charging people different prices based on their willingness to pay rather than on the basis of arbitrary characteristics
D)because price discrimination enables firms to increase output and employment, but race- or gender-based discrimination reduces employment

Question

Quizplus · Accepted Answer

Price discrimination is based on charging customers different prices based on their willingness to pay, which is a rational economic decision. On the other hand, discrimination based on race or gender is based on arbitrary characteristics that have nothing to do with a person's ability to pay or consume a good or service. Discrimination based on arbitrary characteristics is illegal because it discriminates against people based on factors beyond their control.

Why Is Price Discrimination Legal but Not Discrimination Based on Race