Question

Price discrimination may:

• A. Increase the monopoly power of the producer.
• B. Give the monopolist higher profits.
• C. Both (a) and (b)
• D. Develop new traders.

Answer 1

Answer: (C)

Both (a) and (b)

Price discrimination is a situation where different prices are charged for the same product in different markets for the consumers. the benefits of price discrimination are:

1. It can increase the monopoly power of the producer.
2. It can give higher profits to monopolist as he can earn more due to high price charged for the same product depending on the market and type of consumer.