If we observe a firm engaging in price discrimination, it must be TRUE that
A) the firm is enjoying higher total profits than it would have earned if it charged a single price for the product.
B) the firm can identify the preferences of every customer it serves.
C) the firm earns higher profits per unit than it would have earned if it charged a single price for the product.
D) All of the above are correct.

Question

Quizplus · Accepted Answer

Price discrimination allows a firm to increase its total profits by capturing more consumer surplus, but it doesn't necessarily mean higher profits per unit or that the firm can identify every customer's preferences.

If We Observe a Firm Engaging in Price Discrimination, It