The outcome of first-degree price discrimination is ________.

Question

Quizplus · Accepted Answer

First-degree price discrimination, where each consumer is charged a price equal to their maximum willingness to pay, results in Pareto efficiency because it maximizes the total welfare (producer surplus + consumer surplus). However, it leads to inequity because consumers end up paying different prices for the same good or service, and consumer surplus is transferred to the producer.

The Outcome of First-Degree Price Discrimination Is ________