To maximize profit using the practice of price discrimination, firms set different prices according to the characteristics that are correlated with buyers':
A) age.
B) purpose of consumption.
C) income.
D) willingness to pay.

Question

Quizplus · Accepted Answer

Price discrimination involves charging different prices to different consumers based on their willingness to pay. This means that firms identify characteristics that are correlated with a consumer's ability and willingness to pay more for a product or service, and charge them a higher price, while charging a lower price to consumers who are less willing or able to pay. Age, purpose of consumption, and income can be factors that determine a consumer's willingness to pay, but they might not necessarily be the most accurate predictors. Therefore, option D, willingness to pay, is the best choice.

To Maximize Profit Using the Practice of Price Discrimination, Firms