Which of the following can defeat the profit-maximizing strategy of price discrimination?
A)consumer surplus
B)deadweight loss
C)market power
D)arbitrage

Question

Quizplus · Accepted Answer

Arbitrage can defeat the profit-maximizing strategy of price discrimination. Arbitrage is the practice of buying a good or service at a low price in one market and selling it at a higher price in another market. In the context of price discrimination, if a firm charges different prices to different groups of customers, arbitrageurs can buy the product at the lower price meant for one group and sell it to the group who would have to pay a higher price, thereby reducing the profits of the firm.

Which of the Following Can Defeat the Profit-Maximizing Strategy of Price