Alexxs monopoly currently sells its product at a single price. What conditions m

Question

Alexxs monopoly currently sells its product at a single price. What conditions must be met so that he can profitably price discriminate? The firm must have O A. consumers with different price elasticities, the ability to identify the different types of consumers, and the ability to prevent or limit resales. O B. the ability to set price, consumers with different price elasticities, the ability to identify the different types of consumers, and the ability to prevent or limit resales ° C, the ability to set price, consumers with different price elasticities, and the ability to prevent or limit resales D. the ability to set price and the ability to identify each consumer's willingness to pay

Explanation / Answer

For a price discriminating monopolist, the necessary condition are;

A monopolist firm is a single seller of any goods and it has the ability to set prices according to market demand. A monopolist can profitably discriminate prices if he has the ability to set prices because if he has no ability, then he can not charge different prices to different consumers.

There should be consumers with different price elasticity because when there is different price elasticity, it means consumers have a different effect on quantity demand with the change in the price.

A monopolist must have the ability to identify different types of consumer, otherwise, he cannot know what price to charge for which consumers.Therefore a monopolist can price discriminate only when he has the ability to identify different types of consumer.

For price discriminating, it is necessary for the monopolist to ensure that a consumer could not resale the goods otherwise there would be no benefit of price discrimination. Therefore a price discriminating monopolist must have the ability to prevent the resale.

Hence option B is the correct answer.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.