Price discrimination is the practice of selling the same good at more than one price when the price differences are not justified by cost differences. Evaluate the following statement: "Price discrimination is not possible when a good is sold in a perfectly competitive market."

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Business

Kahlua

27 September, 16:53

Price discrimination is the practice of selling the same good at more than one price when the price differences are not justified by cost differences. Evaluate the following statement: "Price discrimination is not possible when a good is sold in a perfectly competitive market."

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Dillon Lucero · Answer 1

The statement is: True.

Explanation:

Perfectly competitive markets are theoretical markets characterized by having many buyers and sellers, where products are homogeneous, having easy conditions for entry or exit of new firms, and where producers are price-takers because the price is determined by supply and demand.

In such a scenario, companies could not set different prices such as in a price discrimination approach because consumers would rather go to the competition.