Question

Price discrimination is a common practice in which of the following market structure?

• A. Oligopoly
• B. Perfect Competition
• C. Monopoly
• D. Duopoly

Hint:

Monopoly = Single seller, high price control, price discrimination possible. Perfect competition = No price discrimination.

Answer 1

The Correct Option is C

Step 1: Concept of price discrimination.
Price discrimination means charging different prices to different consumers for the same product, even though the cost of production is the same.
Step 2: Market condition for price discrimination.
This is possible only when the seller has full control over supply and no close substitutes are available.
Hence, price discrimination is most feasible in a monopoly market structure.
Step 3: Analysis of options.
- (1) Oligopoly: Some price control exists, but price discrimination is not the common practice here.
- (2) Perfect Competition: Not possible, as many sellers exist and products are homogeneous.
- (3) Monopoly: Correct, as the monopolist enjoys price-making power.
- (4) Duopoly: Only two sellers, but not typical for strong price discrimination.
Step 4: Conclusion.
Thus, price discrimination is a common practice in Monopoly.