Price discrimination:
A) by firms selling to final consumers is illegal, but it is usually legal in selling to intermediaries.
B) is not covered by Federal laws, but in some states it is illegal.
C) is always illegal.
D) may be legal if the firm can prove that different prices were set based on different costs.
E) None of these alternatives is correct.

Question

Quizplus · Accepted Answer

Price discrimination is not always illegal. It may be legal if the firm can prove that different prices were set based on different costs. This is known as cost-based price discrimination and is allowed under federal antitrust laws. However, price discrimination based on factors like race, gender, or ethnicity is illegal under the Civil Rights Act of 1964.

Price Discrimination