Which of the following conditions would prevent price discrimination?
A)the ability to identify customers who are willing to pay more
B)the ability to prevent low-price customers from reselling to high-price customers
C)perfect competition
D)a monopoly market structure
E)profit maximization

Question

Quizplus · Accepted Answer

Price discrimination requires some degree of market power, which is absent in a perfectly competitive market. In a perfectly competitive market, all firms must charge the same price to all customers. Therefore, a condition of perfect competition would prevent price discrimination. The other options (A, B, D, E) do not necessarily prevent price discrimination. For example, a company with market power could still face difficulty identifying willing-to-pay customers or preventing resale, and a profit-maximizing firm would still have an incentive to engage in price discrimination if it were profitable to do so.

Which of the Following Conditions Would Prevent Price Discrimination