How does price discrimination move a market that is not perfectly competitive to an efficient output level?
A)Price discrimination causes businesses to charge the price where marginal cost equals marginal benefit for all customers.
B)Price discrimination gives businesses the incentive to increase output to the level where their marginal cost equals the marginal benefit of their last customer.
C)Price discrimination causes a business to raise its output to the level where the average cost is at its minimum.
D)Price discrimination gives businesses the incentive to move revenue to its highest possible level.

Question

Quizplus · Accepted Answer

Price discrimination incentivizes businesses to increase output until the point where marginal cost equals marginal benefit for each additional unit sold to each customer group. This leads to greater efficiency as the business is able to capture more consumer surplus and maximize profits while still producing at a socially optimal level.

How Does Price Discrimination Move a Market That Is Not