Price discrimination is prevented in situations where
A) firms have monopolies.
B) customers can resell the good.
C) customers have different willingness to pay for the good.
D) there are no close substitutes for the good or service.
E) there are legal barriers to entry.

Question

Quizplus · Accepted Answer

Price discrimination can occur when a seller is able to charge different prices to different customers based on their willingness to pay. However, if customers are able to resell the good, then the seller cannot discriminate based on willingness to pay because customers who paid a lower price could potentially sell to customers who were willing to pay a higher price. This would eliminate the seller's ability to extract additional surplus from those who were willing to pay more.

Price Discrimination Is Prevented in Situations Where