The correct answer is: D. None of these
Price discrimination is the practice of charging different prices for the same good or service to different consumers. It can be done by charging different prices to different groups of consumers, or by charging different prices at different times.
Price discrimination can increase output if it allows the firm to sell more units of the good or service. For example, if a firm can charge a higher price to consumers who are willing to pay more, it may be able to sell more units of the good or service than if it charged a single price to all consumers.
However, price discrimination can also decrease output if it leads to consumers buying less of the good or service. For example, if a firm charges a higher price to consumers who are willing to pay more, some consumers may choose not to buy the good or service at all.
Ultimately, whether price discrimination leads to an increase or decrease in output depends on the specific circumstances of the firm and the market.
Here is a brief explanation of each option:
- A. Increase in output: Price discrimination can increase output if it allows the firm to sell more units of the good or service. For example, if a firm can charge a higher price to consumers who are willing to pay more, it may be able to sell more units of the good or service than if it charged a single price to all consumers.
- B. Decrease in output: Price discrimination can also decrease output if it leads to consumers buying less of the good or service. For example, if a firm charges a higher price to consumers who are willing to pay more, some consumers may choose not to buy the good or service at all.
- C. No change in output: Price discrimination may not lead to any change in output if the firm is able to sell the same number of units of the good or service regardless of the price it charges. For example, if a firm has a monopoly in the market, it may be able to charge whatever price it wants and still sell the same number of units of the good or service.
- D. None of these: The correct answer is: D. None of these. Price discrimination can increase, decrease, or have no effect on output depending on the specific circumstances of the firm and the market.