Multiple Select QuestionSelect all that applyWhich of the following are conditions necessary for price discrimination?Multiple select question.AdvertisingHomogeneous marketMarket segregationNo resaleMonopoly power
Question
Multiple Select QuestionSelect all that applyWhich of the following are conditions necessary for price discrimination?Multiple select question.AdvertisingHomogeneous marketMarket segregationNo resaleMonopoly power
Solution
The conditions necessary for price discrimination are:
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Market Segregation: This is necessary because the seller must be able to divide the market into different segments based on consumers' willingness to pay.
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No Resale: This condition is necessary to prevent consumers who purchase the product at a lower price from reselling it to those who are supposed to pay a higher price.
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Monopoly Power: This is necessary because a price discriminator must have some degree of market power, such as a monopoly, to be able to set and enforce different prices.
Advertising and Homogeneous market are not conditions necessary for price discrimination. In fact, a homogeneous market (where all consumers have the same willingness to pay) would make price discrimination impossible.
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