Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Charging different prices to different consumers based on their willingness to pay
B
Setting a single price for all consumers regardless of their willingness to pay
C
Offering discounts to all consumers equally
D
Reducing prices to increase market competition
Understanding the Answer
Let's break down why this is correct
Answer
Price discrimination is when a company charges different prices to different customers for the same product or service. This practice can lead to allocative efficiency, which means resources are used in a way that maximizes total benefits to society. For example, a movie theater might charge lower prices for students and seniors while charging full price for adults. By doing this, the theater can fill more seats, ensuring that more people enjoy the movie, which increases overall satisfaction. Therefore, price discrimination can help match prices with what different groups are willing to pay, leading to better use of resources and happier customers.
Detailed Explanation
Price discrimination means charging different prices to different people. Other options are incorrect because Some might think a single price is fair for everyone; Offering equal discounts seems fair, but it doesn't consider what people can afford.
Key Concepts
price discrimination
Topic
Allocative Efficiency and Pricing
Difficulty
easy level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.