Price discrimination requires the firm to
A)separate customers according to their willingnesses to pay.
B)differentiate between different units of its product.
C)engage in arbitrage.
D)use coupons.

Question

Quizplus · Accepted Answer

Price discrimination involves charging different prices to different groups of customers based on their willingness to pay. In order to do this, the firm must be able to separate customers into different groups based on their willingness to pay. Differentiating between different units of the product or using coupons are pricing strategies that may be used to implement price discrimination, but they are not the defining characteristics of price discrimination. Engaging in arbitrage involves taking advantage of price differentials between different markets and is not directly related to price discrimination.

Price Discrimination Requires the Firm to