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:

The core requirement for price discrimination to persist is the complete absence of any form of market arbitrage (either product arbitrage or buyer arbitrage).

Answer 1

The Correct Option is A