Which of the following best defines price discrimination ?
Correct answer: D. selling a certain product of given quality and cost per unit at different prices to different buyers
- A. charging different prices on the basis of race
- B. charging different prices for goods with different costs of production
- C. charging different prices based on cost-of-service differences
- D. selling a certain product of given quality and cost per unit at different prices to different buyers
Explanation
Price discrimination occurs when the same product of identical quality and cost is sold to different buyers at different prices. Differences in production or service costs explain price differences but are not price discrimination.
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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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