Why Is Price Discrimination Legal but Not Discrimination Based on Race

question 137

Multiple Choice

Why is price discrimination legal but not discrimination based on race or gender?

• A)because price discrimination increases profits and therefore tax revenues for the government, but discrimination based on race or gender reduces tax revenues
• B)because price discrimination reduces deadweight loss, but discrimination based on race or gender increases deadweight loss
• C)because price discrimination involves charging people different prices based on their willingness to pay rather than on the basis of arbitrary characteristics
• D)because price discrimination enables firms to increase output and employment, but race- or gender-based discrimination reduces employment

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Definitions:

Fairness

The quality of being just, equitable, and impartial in decision making and treatment of others.

Proxy

A person authorized to act on behalf of another person, especially in voting or in making decisions in corporate or other formal meetings.

Solicitation

The act of requesting or seeking to obtain something, often used in the context of fundraising, advertising, or proposing business.

Voting Shares

Shares of a company's stock that grant the shareholder the right to vote on corporate matters.