The practice of selling a product to different customers at different prices when marginal cost is the same is known as:
A) price discrimination.
B) monopoly pricing.
C) arbitrage.
D) price segregation.

Question

Quizplus · Accepted Answer

Price discrimination is the practice of charging different prices to different customers for the same product or service, based on the willingness to pay, location, demographics or buying history of each customer. This allows firms to capture more consumer surplus and increase profits. In price discrimination, marginal cost is the same for all customers, but the price charged varies. Monopoly pricing is when a monopolist charges a high price for its product or service because it has market power. Arbitrage is the practice of taking advantage of price differences in different markets to make a profit. Price segregation is not a commonly used term in economics.

The Practice of Selling a Product to Different Customers at Different