A firm cannot price discriminate if it
A)has perfect information about consumer demand.
B)operates in a competitive market.
C)faces a downward-sloping demand curve.
D)is regulated by the government.

Question

Quizplus · Accepted Answer

Price discrimination requires the ability to charge different prices to different groups of consumers. In a competitive market, firms have little to no market power and cannot charge different prices without losing customers to competitors. Therefore, a firm operating in a competitive market cannot price discriminate.

A Firm Cannot Price Discriminate If It