Question

Which of the following is not a condition of price discrimination? a. The seller must be a price searcher. b. The seller must be able to distinguish between customers willing to pay different prices. c. It must cost the seller more to service some customers than others. d. Reselling the product must be extremely costly or must not be possible

Answer 1

Answer:

c. It must cost the seller more to service some customers than others.

Explanation:

Price discrimination is when a producer is able to differentiate prices and take advantage of its consumers' surplus.

A price searcher is someone who can influence their prices to change, price discrimination is not possible without being a price searcher.

The seller must also be able to distinguish between different customer groups if not individual customers, hence the distinguish is a must for price discriminators.

Reselling the product must be expensive and hard other wise economic agents would buy the products where there is a lower price and take advantage by selling where differentiated price is high.

However point C, is conditional and it may actually not cost the seller any additional costs to charge different prices.

Hope that helps.