The correct answer is: Both A and C.
Price discrimination is a pricing strategy where a firm charges different prices for the same good or service to different consumers. This can be done based on a variety of factors, such as the consumer’s willingness to pay, the cost of production, or the level of competition in the market.
Price discrimination is most commonly associated with monopolies, which are firms that have a large market share and can therefore charge higher prices without losing customers. However, it can also be used by firms in monopolistically competitive markets, which are markets with a large number of firms that produce similar products. In these markets, firms may be able to charge different prices to different consumers based on their willingness to pay.
Oligopolies, which are markets with a small number of firms, can also engage in price discrimination. However, they are more likely to do so through indirect means, such as offering discounts or coupons to certain groups of consumers. This is because oligopolistic firms are more likely to be concerned about the reactions of their competitors if they were to openly charge different prices to different consumers.
Price discrimination can be a profitable strategy for firms, but it can also have negative consequences for consumers. When firms charge different prices to different consumers, it can lead to a situation where some consumers are overcharged and others are undercharged. This can be unfair to consumers and can also lead to a decrease in consumer welfare.
Overall, price discrimination is a complex issue with both positive and negative consequences. It is important to carefully consider the potential benefits and costs of price discrimination before implementing it.