Which of the following is TRUE?
A) Monopoly results in a higher quantity of output being sold compared with perfect competition.
B) Price discrimination occurs when there are differences in prices that reflect differences in marginal cost.
C) Charging all customers the same price when costs vary can actually be a case of price discrimination.
D) Price discrimination guarantees that the monopolist will make a profit.

Question

Quizplus · Accepted Answer

Price discrimination occurs when a firm charges different prices to different customers for the same product or service. Charging different prices to different customers based on differences in marginal cost is not price discrimination. However, charging all customers the same price when costs vary is a form of price discrimination known as third-degree price discrimination. Price discrimination does not guarantee that the monopolist will make a profit, as it depends on various factors such as the elasticity of demand and production costs. Monopoly results in a lower quantity of output being sold compared with perfect competition, as the monopolist restricts output to charge a higher price.

Which of the Following Is TRUE