In order to price discriminate, a firm must
A) produce a product that is a close substitute for products of other firms.
B) have different marginal costs for serving different customers.
C) sell to customers with identical price elasticities of demand.
D) be able to prevent resale of its product.

Question

Quizplus · Accepted Answer

To effectively price discriminate, a firm must be able to prevent the resale of its product among different customer groups. This ensures that the firm can charge different prices to different customers without the risk of a lower-priced product being resold into a higher-priced market.

In Order to Price Discriminate, a Firm Must