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CA Foundation · Business Economics · Price Determination in Different Markets

Which of the following is a feature of price discrimination by a monopolist?

Price discrimination means charging different prices for the same product to different buyers or markets, where the price gap is not explained by cost differences. It requires market power, separable markets that prevent resale, and different elasticities of demand in each market.

  1. ACharging the same price to all buyers regardless of cost
  2. BCharging different prices for the same product to different buyers or markets, not justified by cost differencesCorrect
  3. CSelling differentiated products at the same price
  4. DSetting price equal to marginal cost in every market

Explanation

Price discrimination means selling the same good at different prices to different consumers or in different markets where the difference is not due to cost differences. It needs market power, separable markets and different price elasticities, so that resale between markets is not possible. Option A describes uniform pricing.

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