Price discrimination is best described as a situation where a firm
A) charges buyers an excessive price for its product.
B) charges different prices to different groups of buyers.
C) sells the same product for different prices from one year to another.
D) acts as a price taker.

Question

Quizplus · Accepted Answer

Price discrimination is the practice of charging different prices to different groups of buyers, based on factors such as their willingness to pay, their location, or their purchasing history. This allows the firm to capture more value from each customer and increase its profits. It is not necessarily an excessive price, nor does it imply selling the same product for different prices at different times. Additionally, price discrimination is usually associated with firms that have some degree of market power, meaning they can act as price makers rather than price takers.

Price Discrimination Is Best Described as a Situation Where a Firm