If all consumers are uninformed about the quality of a product
A) firms can increase product by selling the same product under a different name at a different price.
B) firms will not be able to price discriminate.
C) firms will price discriminate.
D) firms will increase profits by charging different prices for the same product.

Question

Quizplus · Accepted Answer

If all consumers are uninformed about the quality of a product, firms will not be able to price discriminate because consumers will not be willing to pay a higher price for a product they cannot differentiate from a cheaper one. Therefore, firms will have to set a single price for all consumers, which means they cannot engage in price discrimination.

If All Consumers Are Uninformed About the Quality of a Product