Perfect price discrimination causes the demand curve to become the marginal revenue curve.

Question

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Perfect price discrimination occurs when a firm charges different prices to different customers based on their willingness to pay. In this scenario, the firm is able to capture the entire consumer surplus and maximize profit. Therefore, the demand curve for each individual customer becomes their own marginal revenue curve. Since the firm can charge the highest possible price for each customer, the marginal revenue curve becomes the same as the demand curve.

Perfect Price Discrimination Causes the Demand Curve to Become the Marginal