A firm can exercise price discrimination only when it
A)has market power over a product.
B)has a lot of competitors.
C)produces homogenous products.
D)has no fixed costs.
E)has very few buyers.

Question

Quizplus · Accepted Answer

Price discrimination requires a firm to have market power, which means the ability to set prices above the competitive level without losing all its customers. Without market power, the firm cannot charge different prices to different customers. The other choices are not relevant to price discrimination.

A Firm Can Exercise Price Discrimination Only When It