Price discrimination is only possible when _______.

• A. all buyers have identical willingness to pay
• B. the seller can prevent resale between buyers
• C. the product is a public good
• D. the market is perfectly competitive

Answer: (B)

Verified step by step guidance

1. Understand the concept of price discrimination: it occurs when a seller charges different prices to different buyers for the same product, based on their willingness to pay.
2. Recognize that for price discrimination to be effective, the seller must be able to segment the market and charge different prices to different groups.
3. Identify the key condition that allows price discrimination: the seller must prevent resale between buyers, so that buyers who purchase at a lower price cannot resell to those who would otherwise pay a higher price.
4. Note that if all buyers had identical willingness to pay, there would be no basis for charging different prices, so price discrimination would not be possible.
5. Understand that price discrimination is not possible in perfectly competitive markets or with public goods, because of the inability to control prices or exclude buyers.