Chapter 63, Problem 2MCQ

To determine

The outcome of price discrimination.

Answer to Problem 2MCQ

(c) Can lead to increased efficiency in the market.

Explanation of Solution

Price discrimination can lead to increased efficiency in the market because more units for which the willingness to pay exceeds the marginal cost are produced and sold in the market. Hence, option (c) is correct.

Volume discount is the extension to price discrimination in which a lower price is charged for a greater quantity. Hence, option (a) is incorrect.

Price discrimination is not only limited to the theatre and airline industry but also practice in other industries such as railway. Hence, option (b) is incorrect.

Price discrimination is generally seen in the real world so option (d) is incorrect.

Price discrimination can not take place in perfect completion. Hence option (e) is incorrect.

Economics Concept Introduction

When a different price is charged by a monopolist from a different customer for the same good then it is called price discrimination. It can be seen in the industry where seller charges different price for different willingness to pay the consumer for different class or section.