Question
Differentiate between price discrimination and product differentiation.
Solution
Price Discrimination: Price discrimination is a situation when a monopolist charges different price from different buyers of the same product. This is generally done to maximise profits.
Product Differentiation: Product differentiation is a situation when different producers under monopolistic competition, try to differentiate their product in terms of its shape, size, packaging, trademark or brand name. This is done to attract buyers from the rival firms in the market.
