One of the necessary conditions for price discrimination to occur is that:
A) buyers in different markets have different elasticities of demand.
B) the demand curve is upward sloping.
C) buyers must be allowed to resell the good at a higher price elsewhere.
D) all of these are necessary for price discrimination to occur.

Question

Quizplus · Accepted Answer

In order for a producer to engage in price discrimination, they must be able to identify different groups of buyers with different elasticities of demand. This allows the producer to charge a higher price to the group with a lower elasticity of demand, while charging a lower price to the group with a higher elasticity of demand. If all buyers had the same elasticity of demand, then charging different prices would not be feasible.  Additionally, an upward-sloping demand curve is not necessary for price discrimination to occur, as the producer can still differentiate prices between two groups with a flat demand curve. The ability of buyers to resell the good at a higher price elsewhere may facilitate price discrimination, but it is not a necessary condition.

One of the Necessary Conditions for Price Discrimination to Occur