Two conditions are necessary for profitable price discrimination.These are
A) the firm must sell a standardized product; and the firm must be able to keep its national markets separate.
B) the firm must be able to keep its national markets separate; and the existence of different price elasticities of demand in different countries must exist.
C) the firm must rely upon substantial economies of scale; and the firm cannot be a member of a major trade block.
D) the firm must sell highly differentiated products; and the existence of different prices elasticities of demand in different countries must exist.
E) there must be no tariff differences between the countries and there must be a fragmented retail system.

Question

Quizplus · Accepted Answer

The two necessary conditions for profitable price discrimination are that the firm must be able to keep its national markets separate and that there must be different price elasticities of demand in different countries. The existence of a standardized product or highly differentiated products is not a requirement. Substantial economies of scale or being a member of a major trade block are also not necessary. The presence of no tariff differences between countries and a fragmented retail system are not direct factors that suggest profitable price discrimination.

Two Conditions Are Necessary for Profitable Price Discrimination