Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It allows sellers to charge different prices based on consumer willingness to pay, aligning supply with demand.
B
It leads to a uniform price across different consumer segments, which does not affect supply.
C
It restricts the supply of goods in the market, thus raising the overall demand.
D
It eliminates competition by allowing only one price to be set in the market.
Understanding the Answer
Let's break down why this is correct
Answer
Price discrimination occurs when a seller charges different prices to different consumers for the same product or service. This practice is closely related to supply and demand because it relies on understanding how much different consumers are willing to pay. For example, a movie theater might charge lower prices for children and seniors, knowing they have less money to spend than adults. By doing this, the theater can fill more seats, which increases demand, while also maximizing its revenue by charging higher prices to those who can afford it. Ultimately, price discrimination helps businesses better meet the needs of various consumers while also responding to the dynamics of supply and demand in the market.
Detailed Explanation
Price discrimination means charging different prices to different people. Other options are incorrect because This answer suggests everyone pays the same price; This option says price discrimination limits supply.
Key Concepts
supply and demand
price discrimination
Topic
Microeconomics of Daily Decisions
Difficulty
medium level question
Cognitive Level
understand
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