The main reason a monopoly engages in price discrimination is that:

A. by charging a lower price to some people, it may succeed in discouraging efforts to regulate it.

B. it wants to discourage potential competitors.

C. doing so increases its profits.

D. it wants to discriminate against a particular ethnic group.

Question

Clay Dillon

Business

2 November, 02:04

The main reason a monopoly engages in price discrimination is that:

A. by charging a lower price to some people, it may succeed in discouraging efforts to regulate it.

B. it wants to discourage potential competitors.

C. doing so increases its profits.

D. it wants to discriminate against a particular ethnic group.

+2

Answers (1)

Know the Answer?

Giancarlo Garcia · Answer 1

C. doing so increases its profits.

Explanation:

In a monopoly a single seller supplies a product so has control over pricing, demand, and supply decisions.

Monpolists practice price discrimination where different prices are charged for the same product. Usually customers that have lower disposal income are charged less.

The main reason for this is that the supplier is able to capture consumer surplus and maximise profit on a product.