The owner of a small company has heard that he can make higher profits if he price discriminates. Knowing that your study of economics has made you wise in the way of economics, he asks your advice. What of the following should you tell him?

Any sort of discrimination is bad, so it should forget the whole thing.
In order to price discriminate, the company must find a way to separate buyers by how much they are willing to pay.
Price discrimination is only possible for firms in markets that are perfectly competitive.
Price discrimination only is worthwhile if a company has an upward-sloping marginal cost curve.

Which of the following situations illustrates the economic concept of price discrimination?

Colleges offer scholarships to attract students from low-income families.
A rise in the price of gasoline affects the poor more than the rich.
A speculator attempts to buy when prices are low and sell when they are high.
Land in the center of a city is generally much more valuable than land in the country.

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