A firm engages in price discrimination when it
A) Charges different prices for different units of different goods
B) Charges same prices for different units of the same good
C) Charges a lower price for units for which the willingness to pay is high than for those units for which the willingness to pay is low
D) Charges different prices for different units of the same good

Question

Quizplus · Accepted Answer

Price discrimination involves charging different prices for different units of the same good. This is typically done in order to capture as much consumer surplus as possible, as consumers with a higher willingness to pay are charged a higher price, while those with a lower willingness to pay are charged a lower price. Option A is incorrect because it refers to charging different prices for different units of different goods. Option B is incorrect because it refers to charging the same price for different units of the same good, which is not price discrimination. Option C is incorrect because it refers to charging a higher price for units for which the willingness to pay is high, which is not price discrimination either.

A Firm Engages in Price Discrimination When It