First- degree and second- degree price discrimination are similar in each of the following ways except which one?
A)In both practices, consumers pay higher prices for the first units that they buy.
B)In both practices, firms earn greater economic profit than if they charged a single price for every unit.
C)They both yield the greatest possible profits to the firm.
D)They both convert consumer surplus into additional economic profit.

Question

Quizplus · Accepted Answer

While both first-degree and second-degree price discrimination methods convert consumer surplus into economic profit and result in higher prices for the first units purchased, the key difference is that first-degree price discrimination yields the greatest possible profit to the firm by charging each customer their maximum willingness to pay for each unit, while second-degree price discrimination offers different prices based on the quantity purchased to capture more consumer surplus and achieve greater profits than a single price model, but not necessarily the greatest possible profits.

First- Degree and Second- Degree Price Discrimination Are Similar in Each