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Question
When the firm charges different prices to different customers for the same commodity, it is engaged in ___________.
When the firm charges different prices to different customers for the same commodity, it is engaged in ___________.
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Solution
The correct option is C price discrimination
A firm can only practice price discrimination when it has the ability to influence prices, i.e., it's a price maker. Monopolies usually practice three degrees of price discrimination. They discriminate by reducing the level of consumer surplus, quantity purchased and by segmenting the market.
A firm can only practice price discrimination when it has the ability to influence prices, i.e., it's a price maker. Monopolies usually practice three degrees of price discrimination. They discriminate by reducing the level of consumer surplus, quantity purchased and by segmenting the market.
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