To be able to price discriminate,a firm must
A) lower prices for all customers.
B) raise prices for all customers.
C) be able to identify and separate different types of buyers.
D) sell a product that can be resold.
E) Both answers B and C are correct.

Question

Quizplus · Accepted Answer

Price discrimination involves charging different prices to different types of buyers. To do this, the firm must be able to identify and separate these different groups of buyers. Lowering or raising prices for all customers (options A and B) do not allow for price discrimination, as all customers would be paying the same price. Selling a product that can be resold (option D) is irrelevant to the ability to price discriminate. Option E is partially correct, as identifying and separating different types of buyers is necessary for price discrimination, but raising prices for all customers is not.

To Be Able to Price Discriminate,a Firm Must