Price discrimination refers to:
selling a given product for different prices at two different points in time.
any price above that which is equal to a minimum average total cost.
the selling of a given product at different prices which do not reflect cost differences.
the difference between the prices a purely competitive seller and a purely monopolistic seller would charge.
Which of the following is
a precondition for price discrimination?
The commodity involved must be a durable good.
The good or service cannot be resold by original buyers.
The seller must be able to segment the market, that is, to distinguish buyers with different elasticities of demand.
The seller must possess some degree of monopoly power.
A perfectly discriminating pure monopolist will charge each buyer:
different prices to compensate for differences in the characteristics of the product.
the same price if per unit cost is constant for each unit of the product.
that price which equals the buyer's marginal cost.
the maximum price each would be willing to pay.
If a monopolist engages in perfect price discrimination, it will:
realize a smaller profit.
charge a higher price where individual demand is inelastic and a lower price where individual demand is elastic.
produce a smaller output than when it did not discriminate.
charge a competitive price to all its customers.
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