If a firm charges each consumer the absolute maximum price that he or she is willing to pay,the firm is practicing
A)perfect price discrimination.
B)marginal revenue pricing.
C)price discrimination.
D)monopoly pricing.

Question

Quizplus · Accepted Answer

Perfect price discrimination involves charging each consumer the absolute maximum price they are willing to pay, allowing the seller to capture all of the consumer surplus. This requires the seller to have perfect information about each consumer's willingness to pay, which is difficult to achieve in practice. Marginal revenue pricing involves setting prices based on the marginal revenue generated by each additional unit sold, which may or may not result in price discrimination depending on the heterogeneity of consumer willingness to pay. Price discrimination generally involves charging different prices to different groups of consumers based on their willingness to pay, while monopoly pricing involves charging the highest price that the market will bear given the firm's market power.

If a Firm Charges Each Consumer the Absolute Maximum Price