Asked by Mashal Qudah on Sep 24, 2024
Verified
Which of the following is FALSE about indirect price discrimination
A) The firm is able to identify each customer's willingness to pay
B) The firm is able to charge different prices to the different value customers
C) The firm is be able to prevent arbitrage
D) All of the above
Indirect Price Discrimination
A pricing strategy where the price variance does not directly relate to cost differences but is based on different consumer groups' ability or willingness to pay.
Willingness To Pay
The maximum amount an individual is prepared to spend to procure a good or service, reflecting its perceived value to them.
- Discern the variances between direct and indirect methods of price discrimination.
- Recognize the significance of preventing arbitrage in price discrimination strategies.
Verified Answer
HF
Hannah Flaig2 days ago
Final Answer :
A
Explanation :
Indirect price discrimination does not require the firm to identify each customer's willingness to pay. In indirect price discrimination, the firm sets different prices based on observable characteristics such as age, location, and purchase history.
Learning Objectives
- Discern the variances between direct and indirect methods of price discrimination.
- Recognize the significance of preventing arbitrage in price discrimination strategies.