The MAIN reason a monopoly engages in price discrimination is that:

A) it wants to discriminate against a particular ethnic group.
B) doing so increases its profits.
C) it wants to discourage potential competitors.
D) by charging a lower price to some people,it may succeed in discouraging efforts to regulate it.

Question

Tyrel Wheelings · Accepted Answer

Final Answer : B, Explanation :  The main reason a monopoly engages in price discrimination is to increase its profits by charging different prices to different customers based on their willingness to pay. This allows the monopoly to capture more consumer surplus and extract the maximum possible revenue from each customer, thereby maximizing profits. Price discrimination is a common strategy for monopolies, but it is not done to discriminate against particular ethnic groups or to discourage potential competitors. It may also not be effective in discouraging efforts to regulate the monopoly.

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