A monopolist can engage in price discrimination:
A) if it faces a perfectly elastic demand curve.
B) if it is able to buy a good at a low price and resell it at a higher price.
C) if it is a price maker, can segment the market and prevent customers from reselling.
D) if it faces a perfectly inelastic demand curve.

Question

Quizplus · Accepted Answer

Price discrimination occurs when a firm charges different prices for the same product to different consumers. A monopolist is a price maker, meaning it can set its own prices, and it can segment the market by offering different prices to different groups of consumers based on their willingness and ability to pay. This requires the monopolist to prevent or limit resale of the product, which is possible through various means such as product differentiation, personalized pricing, bundling, or quantity restrictions. Therefore, option C is the correct answer as it describes the conditions under which a monopolist can engage in price discrimination.

A Monopolist Can Engage in Price Discrimination