A firm charges each customer the highest price that customer will pay for the marginal unit under

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Under perfect price discrimination, a firm charges each customer the highest price that customer is willing to pay for each unit, which maximizes profits. This is the only scenario in which a firm can charge different prices for each unit without losing customers. In all other market structures (perfect competition, oligopoly, monopolistic competition, and single-price monopoly), a firm must set a uniform price for all customers or risk losing business.

A Firm Charges Each Customer the Highest Price That Customer