Third-degree price discrimination exists when
A)the seller knows exactly how much each potential customer is willing to pay and will charge accordingly.
B)different prices are charged by blocks of services.
C)when the seller can separate markets by geography,income,age,etc.,and charge different prices to these different groups.
D)when the seller will bargain with buyers in each of the markets to obtain the best possible price.

Question

Quizplus · Accepted Answer

Third-degree price discrimination involves charging different prices to different groups of customers based on their willingness or ability to pay. The seller can separate markets by demographic, geographic, or other characteristics and charge different prices to each group. This allows the seller to capture more consumer surplus and increase profits. Option A describes first-degree price discrimination, where the seller charges each individual customer the maximum they are willing to pay. Option B is not a clear description of any form of price discrimination. Option D describes haggling or bargaining, which is not a form of price discrimination.

Third-Degree Price Discrimination Exists When