Figure 16-4
-Refer to Figure 16-4.Suppose the firm represented in the diagram decides to practice perfect price discrimination.What is the profit-maximizing price it will charge?
A) It should charge a range of prices from $40 to $16.
B) It should charge a range of prices from $40 to $12.
C) $2
D) $8

Question

Figure 16-4 
-Refer to Figure 16-4.Suppose the firm represented in the diagram decides to practice perfect price discrimination.What is the profit-maximizing price it will charge?
A) It should charge a range of prices from $40 to $16. 
B) It should charge a range of prices from $40 to $12. 
C) $2 
D) $8

Quizplus · Accepted Answer

In perfect price discrimination, the firm charges each consumer the maximum price they are willing to pay, which ranges from the highest willingness to pay ($40) down to the lowest price where the firm can still sell its product ($16).

Figure 16-4 -Refer to Figure 16-4.Suppose the Firm Represented in the Diagram