How does the price customers pay under price discrimination compare to the price with no price discrimination or the one that is set according to the marginal cost = marginal benefit?
A)There is no difference in the prices.
B)Under price discrimination, the price is higher.
C)Under price discrimination, the price is lower.
D)Under price discrimination, some customers pay a higher price, and some pay a lower price.

Question

Quizplus · Accepted Answer

Under price discrimination, the price charged to different groups of customers vary according to their willingness to pay, which means some customers may pay a higher price while some may pay a lower price. Hence, the answer is D - Under price discrimination, some customers pay a higher price, and some pay a lower price. This is in contrast to the price under no price discrimination, which is typically set according to the marginal cost = marginal benefit and is the same for all customers.

How Does the Price Customers Pay Under Price Discrimination Compare