A firm will be unable to price discriminate if its customers are able to:

Question

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Price discrimination involves charging different prices to different groups of customers based on their willingness to pay. However, if customers are able to buy the product at a lower price and then resell it to other customers at a higher price (arbitrage), then the firm will be unable to price discriminate effectively. Possessing good knowledge about the product or buying the product with low interest loans do not necessarily prevent a firm from price discriminating.

A Firm Will Be Unable to Price Discriminate If Its