What Is the Primary Benefit of Price Discrimination

question 45

Multiple Choice

What is the primary benefit of price discrimination?

• A) There is no benefit; discrimination of any kind is wrong.
• B) Charging multiple prices generates more profit for firms and matches more buyers and sellers in the marketplace.
• C) It converts firms that were price makers into price takers.
• D) All surplus is transferred from the producer to the consumer.
• E) It takes a market with varying demand elasticities and makes them more inelastic.

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Definitions:

Income Tax

A tax levied by governments on individuals or entities' income, affecting earnings from various sources including wages, investments, or profits from business.

Retail Sales Tax

A tax imposed on the sale of goods and services at the retail level.

Payroll Tax

Taxes imposed on employers and employees, calculated as a percentage of the salaries that employers pay their staff.

Tax Shifting

The process by which the economic burden of a tax is passed from one party to another.