Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It increases consumer surplus for all consumers.
B
It decreases consumer surplus for all consumers.
C
It can increase consumer surplus for some consumers while decreasing it for others.
D
It has no effect on consumer surplus.
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 can reduce consumer surplus, which is the difference between what consumers are willing to pay and what they actually pay. For example, if a movie theater charges students less than adults for tickets, students benefit from lower prices while adults pay more, potentially reducing the overall consumer surplus. As a result, some consumers might end up paying higher prices than they would in a single-price market, leading to a loss in the total benefit consumers receive from the product. However, price discrimination can also allow companies to maximize their profits and offer services to more people, which can have mixed effects on the overall economy.
Detailed Explanation
Price discrimination means charging different prices to different people. Other options are incorrect because This answer suggests everyone benefits equally; This answer assumes everyone loses out.
Key Concepts
consumer surplus
Topic
Price Discrimination and Efficiency
Difficulty
easy level question
Cognitive Level
understand
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