In Order for Effective Price Discrimination to Occur, a Seller

question 203

Multiple Choice

In order for effective price discrimination to occur, a seller must

• A) be a pure monopolist.
• B) have large economies of scale and control over a key natural resource.
• C) face a horizontal demand curve for its product.
• D) have at least two distinguishable groups of consumers.

---

Definitions:

Producer Surplus

The difference between what producers are willing and able to supply a good for and the price they actually receive, measuring the benefit to producers.

Total Surplus

The total net gain to society from creating and consuming a product or service, encompassed by the combination of consumer and producer surplus.

Deadweight Loss

An inefficiency in the economy that results when the market equilibrium for a good or service isn't attained or is unattainable.

Tariff

A tax imposed on imported or, less commonly, exported goods with the aim of raising the cost to influence trade dynamics.