If a firm is able to price-discriminate:
A) some groups of the population will benefit.
B) the monopolist earns a lower profit but all consumers gain.
C) all consumers are worse off.
D) both the monopolist and the consumer are worse off.

Question

Quizplus · Accepted Answer

If a firm is able to price-discriminate, it can sell the same product or service to different groups of consumers at different prices. This allows the firm to capture a larger portion of the consumer surplus and increase its profits. However, this also means that some groups of consumers will pay higher prices than others, which may result in some people being worse off. Nevertheless, price discrimination can benefit some groups of consumers who may not have been able to afford the product or service at the higher price, thus making them better off. Therefore, the best choice is A, as some groups of the population will benefit.

If a Firm Is Able to Price-Discriminate