Who usually benefits from price discrimination in a market?

• A. Only consumers who pay the highest price
• B. Government regulators
• C. Producers or firms implementing price discrimination
• D. All consumers equally

Answer: (C)

Verified step by step guidance

1. Understand the concept of price discrimination: it occurs when a firm charges different prices to different consumers for the same good or service, based on their willingness to pay.
2. Recognize that price discrimination allows producers to capture more consumer surplus by charging higher prices to those willing to pay more and lower prices to more price-sensitive consumers.
3. Analyze the impact on consumers: some consumers pay higher prices, while others pay lower prices, so benefits are not equally distributed among all consumers.
4. Consider the role of government regulators: they typically do not benefit directly from price discrimination; their role is to monitor and regulate market practices.
5. Conclude that the primary beneficiaries of price discrimination are the producers or firms, as they increase their profits by extracting more surplus from the market.