Question

Relative to simple pricing, price discrimination leads to

1. Relative to simple pricing, price discrimination leads to
2. ​Increased profits
3. A simplified pricing schedule
4. Both a and b

Answer 1

Price discrimination is a selling strategy that charges customers different prices for the same product or service based on what the seller thinks they can get the customer to agree to. In pure price discrimination, the seller charges each customer the maximum price he or she will pay. In more common forms of price discrimination, the seller places customers in groups based on certain attributes and charges each group a different price.

The prices are often higher in a given market based on the market potential and this results in the consumers to pay more for a given product or service. *Price discrimination will result in more revenues to the firm (monopoly).The price discrimination also converts consumer surplus to producer surplus.

Hence ( B ) part is a correct answer