When a firm engages in price discrimination it sets marginal revenue equal to marginal cost for each separate set of consumers.

Question

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Price discrimination involves charging different prices to different groups of consumers for the same product, based on their willingness to pay. To maximize profit from each group, a firm sets marginal revenue equal to marginal cost for each separate set of consumers, allowing it to capture more consumer surplus.

When a Firm Engages in Price Discrimination It Sets Marginal