Price discrimination is based on self-selection
A) When a firm can distinguish consumers with a high versus low willingness to pay
B) When a firm offers a menu of alternatives, designed so that different customers will make different choices based on their willingness to pay
C) When a monopolist knows perfectly the customer's willingness to pay for each unit its sells and can charge a different price for each unit
D) When a firm cannot distinguish consumers with a high versus low willingness to pay

Question

Quizplus · Accepted Answer

Price discrimination based on self-selection occurs when a firm offers a range of prices or product options that are designed to attract different groups of consumers based on their willingness to pay. Customers self-select into the option that best matches their preferences and budget constraints. This type of price discrimination is often used by firms in industries such as air travel, where customers may have varying levels of willingness to pay for additional amenities or flexibility.

Price Discrimination Is Based on Self-Selection