Which of the following terms is NOT associated with price discrimination in the global marketplace?

• A. Third-degree price discrimination
• B. Perfect competition
• C. Market segmentation
• D. Arbitrage

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the concept of price discrimination. Price discrimination occurs when a seller charges different prices to different consumers for the same good or service, based on differences in willingness to pay, market segments, or other factors.
2. Step 2: Review the common types of price discrimination. These include first-degree (charging each consumer their maximum willingness to pay), second-degree (price varies according to quantity or version), and third-degree (charging different prices to different groups or segments).
3. Step 3: Analyze the terms given in the problem. 'Third-degree price discrimination' is a well-known type of price discrimination involving market segmentation. 'Market segmentation' refers to dividing the market into groups with different price sensitivities, which is essential for price discrimination. 'Arbitrage' is the practice of buying in one market and selling in another to exploit price differences, which is relevant because it can undermine price discrimination.
4. Step 4: Consider 'Perfect competition'. In perfect competition, many sellers offer identical products, and no single seller can influence the market price. Because prices are determined by the market and are uniform, price discrimination is not possible in perfect competition.
5. Step 5: Conclude that 'Perfect competition' is NOT associated with price discrimination, as it contradicts the conditions necessary for price discrimination to occur.