Relative to single price policy third degree price discrimination
A)always reduces welfare.
B)always increases welfare.
C)may increase welfare if total output falls.
D)may increase welfare if total output rises.

Question

Quizplus · Accepted Answer

Third degree price discrimination may increase welfare if total output rises, as it allows firms to sell at a lower price to a previously unserved market segment, thereby expanding consumer surplus and potentially increasing total output. However, if total output falls due to the discrimination, welfare may be reduced. It ultimately depends on the specific market and circumstances.

Relative to Single Price Policy Third Degree Price Discrimination