What is price discrimination in purchasing strategies?

• A. Charging the same price to all customers
• B. Setting prices based on competitive quotes
• C. Charging different groups different amounts based on their ability to pay
• D. Providing price breaks only to educational institutions

Answer: (C)

Price discrimination means charging different groups different prices for the same product because they have different willingness or ability to pay. This approach seeks to capture more of the consumer surplus by tailoring prices to market segments, often requiring some way to separate buyers and prevent resales. The option that best fits this concept states that different groups are charged different amounts based on their ability to pay, which is the essence of price discrimination. Charging everyone the same price is uniform pricing, pricing based on competitive quotes reflects market-based pricing rather than discrimination by group, and offering price breaks to a specific institution describes a targeted discount and is a narrower example of differential pricing rather than the general practice of varying prices by group based on ability to pay.