To engage in price discrimination,a firm must be:
A)a price taker.
B)one of many firms in an industry.
C)unable to identify consumers whose elasticities differ.
D)a price setter and able to identify consumers whose elasticities differ.

Question

Quizplus · Accepted Answer

Price discrimination requires a firm to be a price setter and able to identify consumers whose elasticities differ. Without the ability to set prices, a firm cannot engage in price discrimination. Additionally, without being able to identify the different elasticities of its consumers, a firm cannot charge different prices to different groups, which is the essence of price discrimination. Thus, option D is the correct answer.

To Engage in Price Discrimination,a Firm Must Be