Which of the following is TRUE about price discrimination in monopolistic markets? I. Price discrimination may be good if it leads to higher output. II. Price discrimination may help to offset high fixed costs, but leads to less research and innovation. III. Single-pricing tends to increase prices for at least a subset of the market.
A) I only
B) II and III only
C) I and III only
D) I and II only

Question

Quizplus · Accepted Answer

I is true because price discrimination allows firms to charge different prices to different segments of the market based on their willingness to pay, which can lead to higher output as different consumers can afford to buy the product at different price levels. 
III is true because in single-pricing where the firm charges the same price to all consumers, those who are willing to pay a higher price will end up paying the same price as those who are willing to pay less, which can increase the overall price paid by at least a subset of the market. 
II is not necessarily true in all cases because price discrimination can also lead to increased profits which can be used to fund research and innovation. Therefore, it is not a definitive outcome of price discrimination in monopolistic markets.

Which of the Following Is TRUE About Price Discrimination in Monopolistic