If a firm sells the same product to different resellers at different prices, this practice is best described as

• A. Price discrimination
• B. Price maintenance
• C. Price fixing
• D. Price skimming

Answer: (A)

Price discrimination is when a seller charges different prices for the same product to different buyers. In this case, the firm sells the same product to various resellers at different prices, often based on factors like volume, contract terms, or negotiating power. This approach aims to capture more profit by tailoring prices to each reseller’s situation, extracting additional value from differences in willingness or ability to pay. It’s not price maintenance, which would keep prices the same across all channels; not price fixing, which involves collusion with other firms to set prices; and not price skimming, which targets high prices to end consumers at a product’s launch rather than varying by reseller.