Asked by Ahmed Ali Rajput on Sep 24, 2024
Verified
Relative to simple pricing,price discrimination leads to
A) Consumer surplus being converted to producer surplus
B) Increased profits
C) A simplified pricing schedule
D) Both a and b
Price Discrimination
A pricing strategy where a seller charges different prices for the same product or service to different customers, based on various criteria.
Producer Surplus
The difference between the amount producers are willing to sell a good for and the amount they actually receive.
- Investigate the consequences of pricing discrimination on the welfare of both consumers and producers.
Verified Answer
SM
Sadaf Mushtaq6 days ago
Final Answer :
D
Explanation :
Price discrimination allows firms to charge different prices to different groups of customers based on their willingness to pay. This increases profits as the firm can capture more of the total consumer surplus. By charging higher prices to customers who are willing to pay more, the firm can convert some of the consumer surplus into producer surplus. Therefore, both A and B are correct. On the other hand, price discrimination does not simplify the pricing schedule, so option C is incorrect.
Learning Objectives
- Investigate the consequences of pricing discrimination on the welfare of both consumers and producers.