The correct answer is: B. firms selling the same product at different prices to different consumers.
Price discrimination is a pricing strategy where a firm charges different prices for the same product to different consumers. This can be done based on a variety of factors, such as the consumer’s willingness to pay, the consumer’s location, or the consumer’s time of purchase.
There are a number of reasons why firms might engage in price discrimination. One reason is to increase profits. By charging different prices to different consumers, firms can capture more of the consumer surplus. Another reason is to increase market share. By offering lower prices to some consumers, firms can attract more customers and increase their market share.
Price discrimination can be a controversial practice. Some people argue that it is unfair to charge different prices to different consumers for the same product. Others argue that price discrimination is a legitimate way for firms to increase profits and market share.
Here is a brief explanation of each option:
- Option A: Firms selling different products at different prices to different consumers. This is not price discrimination, as the firms are selling different products.
- Option B: Firms selling the same product at different prices to different consumers. This is price discrimination, as the firms are selling the same product at different prices to different consumers.
- Option C: Consumers discriminating between different sellers on the basis of the different prices they quote for different products. This is not price discrimination, as the consumers are not the ones setting the prices.
- Option D: Consumers discriminating between different sellers on the basis of the different prices they quote for the same product. This is price discrimination, as the consumers are paying different prices for the same product.