Homework Answers
The correct answer is 'Option C'.
In order to price discriminate, the seller must be able to divide the markets according to the different price elasticities of demand and it must be difficult for one buyer to resell to another buyer. Price discrimination is basically a selling strategy adopting which a seller charges different prices for the same product from customers. If one buyer can resell the product to another buyer then the other buyer may receive the product at a lesser price than the market price due to price discrimination. The seller divide the markets on the basis of the price elasticities of demand because a market having inelastic demand will accept a higher price than the market having relatively elastic demand. So, in order to price discriminate and maximize profits, a seller must divide the markets accordingly. Therefore, 'option D' is correct.
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