What is one possible outcome of price discrimination?

Price discrimination occurs when a firm charges different prices to different consumers for the same good or service based on their willingness to pay. One significant outcome of this practice is increased profit for firms. By effectively segmenting the market and charging higher prices to consumers who are willing to pay more, while potentially offering lower prices or discounts to those with a lower willingness to pay, firms can capture more consumer surplus and convert it into producer surplus.

This strategy allows firms to maximize their overall revenue from different groups without changing the total supply or demand. As a result, the strategic implementation of price discrimination can lead to overall higher profits compared to a single pricing strategy. This maximization of profit occurs because the firm can sell units of the good or service to consumers who might not purchase at a higher uniform price.

The other outcomes, such as higher consumer surplus for all and equal pricing across consumer types, would not typically arise from price discrimination, as the practice is inherently aimed at dividing the consumer base based on their willingness to pay. Lower total revenue for firms is also unlikely, as the goal of price discrimination is to enhance revenue by capitalizing on various consumer price sensitivities.