Of the three types of price- discrimination, which yields the greatest profits to the firm?
A)second- degree price discrimination
B)third- degree price discrimination
C)first- degree price discrimination
D)zero- degree price discrimination

Question

Quizplus · Accepted Answer

First-degree price discrimination, also known as perfect price discrimination, allows the firm to charge each customer the maximum price they are willing to pay. This results in the highest possible profits for the firm as they are able to extract all of the consumer surplus. However, it is difficult for firms to implement this type of discrimination in practice as it requires perfect knowledge of each customer's willingness to pay.

Of the Three Types of Price- Discrimination, Which Yields the Greatest