Which of the following is an example of a price-discriminating monopoly?

• A. An airline charging different prices for the same seat based on when the ticket is purchased
• B. A government setting a single price for electricity for all consumers
• C. A perfectly competitive wheat farmer selling all output at the market price
• D. A monopolist charging the same price to all customers regardless of their willingness to pay

Answer: (A)

Verified step by step guidance

1. Understand the concept of price discrimination: it occurs when a monopolist charges different prices to different consumers for the same good or service, based on their willingness or ability to pay.
2. Identify the characteristics of a price-discriminating monopoly: it must have market power (monopoly), be able to segment the market, and prevent resale between consumers.
3. Analyze each option to see if it fits the criteria of price discrimination:
4. - The airline charging different prices for the same seat based on purchase timing shows different prices for the same product, indicating price discrimination.
5. - The other options either involve uniform pricing or perfectly competitive markets, which do not involve price discrimination.