10. Price discrimination refers to:
A. selling a given product for different prices at two different points in time.
B. any price above that which is equal to a minimum average total cost.
C. the selling of a given product at different prices that do not reflect cost differences.
D. the difference between the prices a purely competitive seller and a purely monopolistic seller would charge.

Question

10.    Price discrimination refers to:
A.    selling a given product for different prices at two different points in time.
B.    any price above that which is equal to a minimum average total cost.
C.    the selling of a given product at different prices that do not reflect cost differences.
D.    the difference between the prices a purely competitive seller and a purely monopolistic seller would charge.

BlackTom AI · Accepted Answer

Question: Price discrimination refers to which of the following?

Option A: selling a given product for different prices at two different points in time.
- This describes price variation over time, sometimes called dynamic pricing or time-based pricing, but price discrimination is more specific: it involves charging different prices to different groups or buyers, not merely changing prices over time. So this is incomplete or misleading as a definition.

Option B: any price above that which is equal to a minimum average total cost.
- This statement conflates profitability with the concept of price discrimination. Price discrimination is not about being above minimum average total cost; it is about charging different prices to different buyers for reasons other than cost differences. Therefore this option is incorrect.

Option C: the selling of a given product at different prices that do not reflect cost differences.
- This captures the essence of price discrimination: identical or similar products sold at different prices to different consumers or groups, without corresponding cost differences to justify those price differences. It isolates pricing from production costs and relies on factors like willingness to pay, market segmentation, or consumer differences. This option aligns with standard definitions of price discrimination in microeconomics.

Option D: the difference between the prices a purely competitive seller and a purely monopolistic seller would charge.
- This describes a potential price gap between market structures, not price discrimination. Price discrimination concerns charging different prices to different buyers within the same market structure, not comparing prices across different market forms. Therefore D is incorrect.

In summary, only Option C accurately defines price discrimination as charging different prices that do not reflect cost differences, while A, B, and D describe other pricing ideas or misinterpret the concept.

ECNM1116.36617.202230 Practice Quiz Pure Monopoly

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