If a firm is able to charge each customer the maximum amount that he or she is willing to pay for its good,
A)the firm is engaging in rent-seeking behavior
B)profits for the firm will be lower than for a single-price monopolist
C)the firm will be violating federal law
D)this is perfect price discrimination
E)barriers to entry into the market will fall

Question

Quizplus · Accepted Answer

This is an example of perfect price discrimination, where the firm is able to charge each customer their maximum willingness to pay. This results in higher profits for the firm compared to a single-price monopolist. There is no indication that the firm is engaging in rent-seeking or violating federal laws, and barriers to entry may or may not fall depending on other factors in the market.

If a Firm Is Able to Charge Each Customer the Maximum