Question

Firms in which of the following market structures cannot engage in price discrimination?

perfect competition

monopolistic competition

monopoly

none of these answer choices are correct

Answer 1

Option 1

perfect competition

perfect competitive firms can not engage in price discrimination because the firms are price takers.

A perfectly competitive market has many firms and many sellers like no one can power over price.

The price is decided by the market equilibrium, and every firm takes it to produce its quantity.

But a monopolistic firm and monopoly has some power over price so these can engage in different price discriminations, monopolistic competition can discriminate by discount by age or gender, or as per market or as per seasons

a monopoly can discriminate person to person or can engage in any discrimination because it has the highest power over price.