What is meant by price discrimination?

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Q: 81 (CDS-II/2015)
What is meant by price discrimination?

question_subject: 

Economics

question_exam: 

CDS-II

stats: 

0,65,21,8,65,7,6

keywords: 

{'price discrimination': [0, 0, 0, 1], 'different prices': [0, 0, 0, 1], 'commodity': [0, 0, 0, 1], 'different consumers': [0, 0, 0, 1], 'subsidization': [0, 0, 0, 1], 'lower price': [0, 0, 0, 1], 'price': [0, 3, 1, 12], 'product': [3, 1, 4, 10]}

Price discrimination refers to a situation where the same product is sold to different consumers for different prices. This means that the seller charges different prices to different customers based on factors such as their willingness to pay, their location, their age, or any other relevant characteristics.

Option 1, which suggests that price discrimination is an increase in the price of a commodity over time, is incorrect. Price discrimination is not about the change in price over time, but rather about charging different prices to different customers at the same time.

Option 3, which suggests that price discrimination is the subsidization of a product by the government to sell it at a lower price, is also incorrect. Price discrimination is not about government subsidies, but about charging different prices to different customers based on their characteristics.

Option 4, which suggests that price discrimination is a general decrease in price of a commodity over time, is also incorrect. Price discrimination is not about the overall trend in prices, but about the differential pricing for different customers.

Therefore, the correct answer is option 2, which correctly defines price discrimination as the practice of selling the same product to different consumers for different prices.