Question

In order to engage in price discrimination, which of the following must be true?

Group of answer choices

Market can be segmented

Firm has monopoly power

All of these

Goods cannot be resold

Answer 1

Option C.

• A firm is said to price discriminate if it charges different customers with different prices based on their ability and willingness to pay.
• In order to engage in price discrimination, the following three conditions must be met :

1. The market must possess the ability to be segmented in order to incorporate different customers.
2. Each of these firms must also have some monoply power if they wish to price discriminate.
3. They must prevent the resale of their goods by their customers to other businesses or other customers.