Question

A monopolist sells different units of output for different prices, but every individual who buys the same quantity of the good pays the same price. It is known as _ _ _ price discrimination.

• A. first degree
• B. third degree
• C. perfect
• D. second degree

Hint:

Second-degree price discrimination depends on quantity purchased, whereas third-degree discrimination depends on consumer groups.

Answer 1

The Correct Option is D

Step 1: Recall the meaning of price discrimination.
Price discrimination occurs when a seller charges different prices for the same product under different conditions.

Step 2: Understand first-degree price discrimination.
In first-degree or perfect price discrimination, the monopolist charges each consumer the maximum price they are willing to pay.
Thus, different consumers may pay different prices for the same unit.

Step 3: Understand second-degree price discrimination.
In second-degree price discrimination, price varies according to the quantity purchased.
Consumers buying the same quantity pay the same price, while consumers purchasing different quantities may pay different per-unit prices.
Examples include bulk discounts and block pricing.

Step 4: Understand third-degree price discrimination.
In third-degree price discrimination, different groups of consumers are charged different prices based on identifiable characteristics such as age, region, or occupation.

Step 5: Match the statement with the concept.
The question states:
Different quantities are sold at different prices but
every buyer purchasing the same quantity pays the same price. This exactly describes second-degree price discrimination.

Step 6: Final conclusion.
Therefore, the correct answer is
\[ \boxed{\text{second degree}} \]
Hence, the correct option is (D).