Economics • Economic BasicsEasy
Which of the following best describes 'Price Discrimination' by a monopolist?
A. Charging different prices for different types of goods produced by the same firm
B. Charging different consumers different prices for the same good or service based on willingness to pay✓ Correct Answer
C. Refusing to sell goods to competitors to eliminate market competition
D. Setting prices strictly equal to the marginal cost of production
💡 Solution & Explanation
Price discrimination occurs when a monopolist charges different consumers varying prices for the identical product based on their respective willingness or ability to pay rather than differing production costs. Setting uniform prices equal to marginal cost reflects perfect competition rather than discriminatory pricing strategies. Firms adopt price discrimination primarily to maximize total revenue and capture consumer surplus.
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