Firms are able to price discriminate
A) when all customers are uninformed about quality differences.
B) when no customers are uninformed about quality differences.
C) when some customers are uninformed about quality differences.
D) when there is full information about quality available to all customers.

Question

Quizplus · Accepted Answer

Price discrimination occurs when a firm charges different prices to different groups of customers for the same product or service. This is possible when some customers are unaware of quality differences or other factors that may influence their willingness to pay for the product or service. If all customers have full information about quality, there would be no basis for the firm to charge different prices to different customers. Therefore, option C is the best choice as it suggests that some customers may not have complete information about quality, allowing the firm to price discriminate.

Firms Are Able to Price Discriminate