Which of the following statements about price discrimination is incorrect?

Show Answers

Perfect price discrimination leads to deadweight loss.Price discrimination has the potential to improve overall economic efficiency.For price discrimination to occur, the seller must be able to distinguish buyers based on their willingness to pay.Price discrimination results in higher profits for a monopolist.To practice price discrimination, a monopolist must prevent buyers from reselling the product.

Explanation

Option A is false because perfect price discrimination actually eliminates deadweight loss by capturing all consumer surplus. The other statements are true: price discrimination can enhance economic welfare, requires the ability to segment buyers by willingness to pay, increases a monopolist’s profits, and necessitates that arbitrage among buyers is not possible.