If a firm practices first-degree price discrimination, the firm must:
A) have customers with identical demand curves.
B) have complete information about each customer's unique demand curve before the customer buys the product.
C) be able to identify each customer's demand curve after the customer buys the product.
D) lack market power but know how its customers differ by their willingness to pay for the product.

Question

Quizplus · Accepted Answer

First-degree price discrimination requires a firm to have complete information about each customer's willingness to pay, allowing it to charge each customer the maximum price they are willing to pay for a product or service. This necessitates knowing each customer's unique demand curve before the purchase is made.

If a Firm Practices First-Degree Price Discrimination, the Firm Must