Question

Following is the consequence of the price discrimination-

A. Decrease in consumer surplus
B. Increase in efficiency in the market
C. Increase in quantity of goods consumed
D. All of the above

Answer 1

Price discrimination can lead to a decrease in consumer surplus, an increase in efficiency in the market, and an increase in the quantity of goods consumed.

Step-by-step explanation:

Price discrimination refers to the practice of charging different prices for the same product to different consumers. There are several consequences of price discrimination:

1. Decrease in consumer surplus: Price discrimination often leads to a decrease in consumer surplus because different consumers are charged different prices, and those who are willing to pay more end up paying higher prices, reducing the overall benefit they receive from the product.
2. Increase in efficiency in the market: Price discrimination can lead to an increase in market efficiency by allowing firms to extract more revenue from consumers who are willing to pay higher prices, while also potentially increasing the quantity of goods consumed.
3. Increase in quantity of goods consumed: When price discrimination leads to lower prices for certain groups of consumers, it can result in an increase in the quantity of goods consumed by those groups.

Therefore, the correct answer is D. All of the above.