Question

Which of the following is NOT a requirement for successful price discrimination? Sellers must be able to separate the market into different consumer groups based on their elasticities of demand. Sellers must have some market power. Sellers must be able to prevent arbitrage; that is, it must be impossible or prohibitively expensive for low-price buyers to resell to higher-price buyers. Sellers must have higher price elasticities than buyers.

Answer 1

The correct answer is option d.

Step-by-step explanation:

Price discrimination is said to be existing if the same seller is selling same goods and services at different prices.

For price discrimination the seller must be able to differentiate market on the basis of price elasticity of demand. Higher price is charged where demand is less elastic.

The seller must have some degree of monopoly power.

The seller must prevent reselling of goods between the two market segments.

The different price elasticity for sellers and buyers is not a necessary condition.