Relative to simple pricing, price discrimination leads to a. Consumer surplus being converted to producer surplus b. Increased profits c. A simplified pricing schedule d. Both a and b

Question

Business

Elyse

28 December, 12:23

Relative to simple pricing, price discrimination leads to a. Consumer surplus being converted to producer surplus b. Increased profits c. A simplified pricing schedule d. Both a and b

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Answers (1)

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Elise Boyd · Answer 1

The correct answer is letter "D": Both a and b.

Explanation:

Price discrimination refers to offering different prices to different customers sue to a certain feature such as age, income or location just to name a few. Price discrimination always has a valid excuse for setting different prices, otherwise, it would be considered out of the law.

Price discrimination leads to consumer surplus since costumers benefited by the discrimination will pay less for the product they want to purchase which represents more revenue for producers due to the increase in quantity demanded that the decrease in price represent - demand law. Thus, price discrimination will eventually result in a producer surplus.