A monopolist can successfully practise price discrimination only when it can:
Correct answer: C. Produce where average cost is lowest
- A. Sell an identical product at one uniform price
- B. Separate buyers and prevent profitable resale
- C. Produce where average cost is lowest
- D. Make all consumers have identical demand
Explanation
Price discrimination requires the seller to identify groups with different willingness to pay and limit resale between them. If resale is easy, buyers offered a lower price can sell to buyers facing a higher price.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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