Consider the following actions undertaken by a firm:
a. charging a higher price for products of higher quality
b. charging different prices to different consumers for the same product when the variation cannot be explained by cost differences
c. charging different prices for products of different qualities
d. charging a lower price to match a competitor's price
Which of the above will be considered price discrimination?
A) a, b, c, and d
B) a, b, and d only
C) b and d only
D) b only

Question

Consider the following actions undertaken by a firm: 
a. charging a higher price for products of higher quality
b. charging different prices to different consumers for the same product when the variation cannot be explained by cost differences
c. charging different prices for products of different qualities
d. charging a lower price to match a competitor's price
Which of the above will be considered price discrimination?
A) a, b, c, and d
B) a, b, and d only
C) b and d only
D) b only

Quizplus · Accepted Answer

Price discrimination occurs when a firm charges different prices to different consumers for the same product without cost justification, which is described in option b.

Consider the Following Actions Undertaken by a Firm