Which of the following is not a condition for price discrimination ?
(A) The seller should have price setting power.
(B) The seller should be able to divide his market into two or more sub markets.
(C) The price elasticity of the product should be different in different sub marke

Question

Which of the following is not a condition for price discrimination ?
(A) The seller should have price setting power.
(B) The seller should be able to divide his market into two or more sub markets.
(C) The price elasticity of the product should be different in different sub markets.
(D) It should be possible for buyers of low-priced market to resell the product to the buyers of high-priced market.

Accepted Answer

> [!TLDR]
> A necessary condition is that resale between sub-markets is IMPOSSIBLE; (D) states the opposite, so it is not a condition.

### Step 1 — Conditions required for price discrimination
1. The seller must have **price-setting (monopoly) power**.
2. The market must be **divisible into two or more separable sub-markets**.
3. The **elasticity of demand must differ** across the sub-markets (so different prices are profitable).
4. **No resale (no seepage)** — buyers in the cheap market must NOT be able to resell to the dear market, otherwise arbitrage wipes out the price gap.

### Step 2 — Match the options
- **(A)** price-setting power — a valid condition.
- **(B)** ability to divide the market — a valid condition.
- **(C)** different elasticities in sub-markets — a valid condition.
- **(D)** buyers of the low-priced market CAN resell to the high-priced market — this is the very thing price discrimination must PREVENT. Stated as a condition, it is false. …

Price Discrimination

How it works

Quick example

Step 1 — Conditions required for price discrimination

Step 2 — Match the options

Step 1 — Conditions required for price discrimination

Step 2 — Match the options

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