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The price discrimination under monopoly will be possible under which of the following conditions?
- a)The seller has no control over the supply of his product
- b)The market has the same condition all over
- c)The price elasticity of demand is different in different markets
- d)The price elasticity of demand is uniform
Correct answer is option 'C'. Can you explain this answer?
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The price discrimination under monopoly will be possible under which o...
Price Discrimination under Monopoly
Price discrimination is the practice of charging different prices for the same product or service to different consumers. Under a monopoly, price discrimination is possible because the firm has the power to set the price of the product without any competition. However, certain conditions must be met for price discrimination to occur.
Conditions for Price Discrimination under Monopoly
a) Control over the supply of the product: The seller must have control over the supply of the product to be able to charge different prices in different markets. This is because if the supply is fixed, the seller cannot increase the supply in one market without reducing the supply in another market, which can lead to a shortage of the product in one market.
b) Same market conditions: Price discrimination is not possible if the market has the same condition all over. If the market conditions are the same, consumers will have the same willingness to pay for the product, and the seller will not be able to charge different prices in different markets.
c) Different price elasticity of demand: Price discrimination is possible when the price elasticity of demand is different in different markets. Price elasticity of demand measures the responsiveness of demand to changes in price. If the demand is elastic, a small change in price will result in a large change in demand, while if the demand is inelastic, a change in price will have a small effect on demand.
d) Uniform price elasticity of demand: If the price elasticity of demand is uniform in all markets, price discrimination is not possible. This is because the seller will not be able to charge different prices in different markets as consumers will have the same responsiveness to changes in price.
Conclusion
Price discrimination is a strategy used by monopolies to increase their profits by charging different prices in different markets. However, certain conditions must be met for price discrimination to occur, such as having control over the supply of the product and different price elasticity of demand in different markets.
Price discrimination is the practice of charging different prices for the same product or service to different consumers. Under a monopoly, price discrimination is possible because the firm has the power to set the price of the product without any competition. However, certain conditions must be met for price discrimination to occur.
Conditions for Price Discrimination under Monopoly
a) Control over the supply of the product: The seller must have control over the supply of the product to be able to charge different prices in different markets. This is because if the supply is fixed, the seller cannot increase the supply in one market without reducing the supply in another market, which can lead to a shortage of the product in one market.
b) Same market conditions: Price discrimination is not possible if the market has the same condition all over. If the market conditions are the same, consumers will have the same willingness to pay for the product, and the seller will not be able to charge different prices in different markets.
c) Different price elasticity of demand: Price discrimination is possible when the price elasticity of demand is different in different markets. Price elasticity of demand measures the responsiveness of demand to changes in price. If the demand is elastic, a small change in price will result in a large change in demand, while if the demand is inelastic, a change in price will have a small effect on demand.
d) Uniform price elasticity of demand: If the price elasticity of demand is uniform in all markets, price discrimination is not possible. This is because the seller will not be able to charge different prices in different markets as consumers will have the same responsiveness to changes in price.
Conclusion
Price discrimination is a strategy used by monopolies to increase their profits by charging different prices in different markets. However, certain conditions must be met for price discrimination to occur, such as having control over the supply of the product and different price elasticity of demand in different markets.
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The price discrimination under monopoly will be possible under which o...
Price Discrimination is possible only when the elasticities are different in both markets. So that the monopolist earn profits. So correct answer is C
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The price discrimination under monopoly will be possible under which of the following conditions?a)The seller has no control over the supply of his productb)The market has the same condition all overc)The price elasticity of demand is different in different marketsd)The price elasticity of demand is uniformCorrect answer is option 'C'. Can you explain this answer?
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The price discrimination under monopoly will be possible under which of the following conditions?a)The seller has no control over the supply of his productb)The market has the same condition all overc)The price elasticity of demand is different in different marketsd)The price elasticity of demand is uniformCorrect answer is option 'C'. Can you explain this answer?, a detailed solution for The price discrimination under monopoly will be possible under which of the following conditions?a)The seller has no control over the supply of his productb)The market has the same condition all overc)The price elasticity of demand is different in different marketsd)The price elasticity of demand is uniformCorrect answer is option 'C'. Can you explain this answer? has been provided alongside types of The price discrimination under monopoly will be possible under which of the following conditions?a)The seller has no control over the supply of his productb)The market has the same condition all overc)The price elasticity of demand is different in different marketsd)The price elasticity of demand is uniformCorrect answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
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