Efforts to price discriminate on the part of a price searcher:
A)are bad because they reduce total surplus.
B)always maximize profits.
C)are welfare increasing because they increase consumer's surplus.
D)are less effective than other forms of pricing.

Question

Quizplus · Accepted Answer

Efforts to price discriminate by a price searcher are aimed at charging different prices to different customers or groups of customers based on their willingness to pay. This enables the price searcher to capture more consumer surplus by charging a higher price to those who are willing to pay more, while still capturing the surplus from those who are willing to pay a lower price. By doing so, the price searcher can increase their total profits, which is the main goal of price discrimination. Therefore, option B is the correct choice. Options A and C are incorrect because they make assertions that are not necessarily true, while option D is incorrect as it suggests that there are more effective pricing strategies than price discrimination, which is not necessarily the case.

Efforts to Price Discriminate on the Part of a Price