If we observe a firm engaging in price discrimination, it must be true that: A. The...
If we observe a firm engaging in price discrimination, it must be true that: A. The firm can identify the preferences of every customer it serves. B. The firm is enjoying higher total profits than it would have earned if it charged a single price for the product. C. The firm earns higher profits per unit than it would have earned if it charged a single price for the product. D. All of the above are correct.
Homework Answers
Option B is correct
For price discrimination there are three conditions required. The firm must be able to identify the preferences of consumers not each and every consumer but consumer groups. Resale should be prevented and firm should have a market power. when price discrimination is used by charging different prices from different consumers overall profit is increased. However since quantity is also increased we cannot say if per unit profit also increases.
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If we observe a firm engaging in price discrimination, it must
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