Charging each customer his or her maximum willingness to pay is:
A) unethical.
B) perfect price discrimination.
C) not a profit-maximizing strategy.
D) impossible in practice.

Question

Quizplus · Accepted Answer

Charging each customer their maximum willingness to pay is known as perfect price discrimination. This strategy allows a firm to charge each customer their highest possible price, maximizing profits. While it may seem unfair to customers, it is not considered unethical as each customer is willing to pay that price. However, implementing perfect price discrimination is challenging as businesses must have detailed and individualized information about each customer's willingness to pay.

Charging Each Customer His or Her Maximum Willingness to Pay