Economics • Economic BasicsEasy
Which of the following represents 'Price Discrimination' in market economics?
A. Charging different prices to different consumers for the exact same good or service based on their willingness to pay✓ Correct Answer
B. Imposing import tariffs on foreign goods to protect domestic industries
C. Providing government subsidies to low-income households for essential commodities
D. Varying the production cost based on economies of scale
💡 Solution & Explanation
Price discrimination describes the market strategy where a seller charges different prices to various consumers for the identical good based on their maximum willingness to pay, thereby capturing the entire consumer surplus. Import tariffs and government subsidies deal with international trade protection and welfare transfers rather than monopolistic pricing behavior. First-degree price discrimination allows a seller to charge every consumer their exact reservation price.
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