Question

Which of the following conditions must be true so that a firm can price discriminate?

A.

There are no other firms in the market.

B.

The good is a non-durable.

C.

The good cannot be easily resold.

D.

All of the above must be true.

Answer 1

Option C.

• Price discrimination refers to the process in which the firms charge different customers with different price's based on their willingness or their ability to pay. That is they charge higher rates from high Income people and charge lower rates from low income groups.
• One of the most essential thing that the firms must ensure for successful price discrimination is that, their goods cannot be easily resold.
• The firms must ensure that, their low price customers do not resell their goods to other suppliers in high price markets.