Question

State whether the two fundamental conditions given below for Price Discrimination to become possible are correct or incorrect:
Condition (I): The unit of the products can't be transferred from one market to another.
Condition (II): The buyers in the dearer market can't transfer themselves into the cheaper market to buy the product. In light of the above statements, choose the most appropriate answer from the options given below:

• A. Both Condition (I) and Condition (II) are correct.
• B. Both Condition (I) and Condition (II) are incorrect.
• C. Condition (I) is correct but Condition (II) is incorrect.
• D. Condition (I) is incorrect but Condition (II) is correct.

Hint:

Price discrimination needs non-transferable products and segmented buyers to prevent arbitrage and market switching.

Answer 1

The Correct Option is A

Step 1: Price discrimination needs arbitrage blocked from two sides, resale of the product and buyer movement.
Step 2: Condition (I) stops resale between markets, so it is correct.
Step 3: Condition (II) stops buyers from switching to the cheaper market, so it is also correct.
\[ \boxed{\text{Both Condition (I) and (II) correct, Option (1)}} \]