Chapter 63, Problem 1MCQ

To determine

Characteristic is necessary for a firm to price discriminate.

Answer to Problem 1MCQ

(d) Some control over price.

Explanation of Solution

There must be some control over the price for a firm to price discriminate because in price discrimination different price is charged for different consumer and price cannot be uniform for all consumer. Hence, option (d) is correct.

Price discrimination cannot exist in perfect competition. Hence, options (a) and (c) are incorrect.

For price discrimination, there is no need for a differentiated product so it's not a necessary condition. Hence, option (b) is incorrect.

A horizontal demand curve means an unlimited quantity is demanded at a fixed price, but a different price is charged under the price discrimination, hence option (e) is incorrect.

Economics Concept Introduction

When monopolists sell the same good to a different customer for a different price is called price discrimination. Price discrimination takes place to increase the profit that monopolist charge according to the willingness to pay off consumers.