Why is it important that a firm have market power if it wishes to engage in price discrimination?
What will be an ideal response?
If a firm does not have market power then it will face price competition from other firms in the industry if it tries to increase the price to one group of consumers. The competitors will charge a lower price to this group of consumers and the first firm will end up serving only the low price consumers. This will make it unprofitable to engage in price discrimination.
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Which of the following is one reason why trade makes all parties better off? a. Because it always expands the amount of domestic production of each good and service, and more is preferred to less. b. Because it permits all parties to acquire some items better suited to their tastes
c. Because it makes people appreciate what they have, and they are happier. d. Because it encourages consumption rather than saving.
When the wages paid to government economists increase, the labor supply curve for academic economists
a. shifts to the left. b. shifts to the right. c. will become backward-sloping. d. will not change.