Consider the following actions undertaken by a firm:
A.charging a higher price for products of higher quality
B.charging different prices to different consumers for the same product when the variation cannot be explained by cost differences
C.charging different prices for products of different qualities
D.charging a lower price to match a competitor's price
Which of the above will be considered price discrimination?
A)a, b, c, and d
B)a, b, and d only
C)b and d only
D)b only

Question

Quizplus · Accepted Answer

Price discrimination refers to charging different prices to different customers for the same product, when the price difference cannot be attributed to cost differences. Option A is not price discrimination, as different quality products require different costs. Option B is price discrimination, as consumers pay different prices for the same product without any cost differences. Option C is also price discrimination, as customers pay different prices for products of different qualities, which may not justify the price difference. Option D is not price discrimination, as firms may match competitors' prices to remain competitive in the market. Therefore, the correct option is D, as only options B and D are considered price discrimination.

Consider the Following Actions Undertaken by a Firm