Which of the following must exist for a firm to engage in price discrimination?
A) The firm must be able to identify and separate its buyers into different classes, and the low-price buyers cannot resell the product to the high-price buyers.
B) The firm must face an inelastic demand.
C) The firm must be able to realize economies of scale.
D) The firm must have no more than one class of buyer.
E) The firm must be a natural monopoly.

Question

Quizplus · Accepted Answer

For a firm to engage in price discrimination, it must be able to identify and separate its buyers into different classes, and prevent low-price buyers from reselling to high-price buyers. This is necessary to prevent arbitrage and maintain price discrimination. The other options listed are not requirements for price discrimination.

Which of the Following Must Exist for a Firm to Engage