Which of the following is TRUE about price discrimination in monopolistic markets?
I. Price discrimination may be good if it leads to higher output.
II. Price discrimination may help to offset high fixed costs, but it leads to less research and innovation.
III. Single pricing tends to increase prices for at least a subset of the market.
A) I only
B) II and III only
C) I and III only
D) I and II only

Question

Quizplus · Accepted Answer

I. Price discrimination may be beneficial if it leads to higher output since it allows firms to serve different segments of the market with different prices, increasing their overall demand.
II. Price discrimination can lead to less research and innovation as firms are not pressured to innovate to maintain their market power.
III. Single pricing tends to increase prices for at least a subset of the market, as some consumers willing to pay a higher price for a product will not buy it at a lower price due to the presence of consumers that are not willing to pay as much. Price discrimination can potentially lower prices for the subset of consumers that are not willing to pay as much, leading to a more efficient outcome.

Which of the Following Is TRUE About Price Discrimination in Monopolistic