When a firm is able to engage in perfect price discrimination, its marginal revenue curve
A) lies below its demand curve.
B) is the same as its supply curve.
C) is the same as its demand curve.
D) lies above its demand curve.
E) is undefined because it does not exist.

Question

Quizplus · Accepted Answer

When a firm engages in perfect price discrimination, it is able to charge each customer the maximum amount they are willing to pay for the good or service, resulting in a unique price for each unit sold. Since the firm is able to extract all potential consumer surplus, the marginal revenue curve would coincide with the demand curve.

When a Firm Is Able to Engage in Perfect Price