Which of the following statements is not correct?
A)First-degree and third-degree price discrimination work to increase a firm's profits by converting consumer surplus into revenue for the firm.
B)First-degree and third-degree price discrimination work to increase a firm's profits by more accurately matching willingness to pay to the marginal costs of production.
C)First-degree price discrimination works to increase a firm's profits by converting consumer surplus into revenue for the firm, while third-degree price discrimination increases a firm's profits by more accurately assessing the willingness to pay of different groups of consumers.
D)Because it focuses on more accurately assessing the willingness to pay of different groups of consumers, third-degree price discrimination will increase a firm's profits more than will first-degree price discrimination.

Question

Quizplus · Accepted Answer

Third-degree price discrimination will increase a firm's profits more than first-degree price discrimination because it allows the firm to more accurately assess the willingness to pay of different groups of consumers and charge different prices accordingly. However, both first-degree and third-degree price discrimination aim to increase a firm's profits by converting some consumer surplus into revenue for the firm. Therefore, statement A is correct, and statement C is partially correct as it only applies to first-degree and third-degree price discrimination, respectively. Statement B is also correct as third-degree price discrimination aims to match different groups of consumers' willingness to pay with the marginal cost of production.

Which of the Following Statements Is Not Correct