Question

Question 17 (1 point) Price discrimination is more common for firms selling services than for manufacturing firms because monopoly is more common in producing services than in producing manufactured goods. O price elasticities differ among consumers of services more than among customers of manufactured goods. it is easier to prevent resale of a service than of a manufactured product. firms selling services are more likely to have constant marginal cost curves. Question 18 (1 point) Assume that a monopolist produces output at a constant marginal cost of $12.00. If the monopolist sells in two different markets, market A where the elasticity of demand is -2 and market B where the elasticity of demand is -4, what will be the profit-maximizing prices in the two markets? Price in market A will be $12 and Price in market B will be $24. Price in market A will be $24 and Price in market B will be $16. Price in market A will be $20 and Price in market B will be $10.

Answer 1

A firm can practice price discrimination when it is able to fulfill following two conditions -

1. Firm is able to segregate the customers into different groups based on their respective elasticity of demand.

2. Firm is able to prevent resale between different groups of customers that are charged different prices.

A service is more difficult or rather impossible to resell relative to manufactured product.

So, service selling firms can prevent resale in much more effective manner than manufactured goods selling firms.

So,

Price discrimination is more common for firms selling service than for manufacturing firms because it is easier to prevent resale of service than of a manufactured product.

Hence, the correct answer is the option (C).