Figure 16-1

-Refer to Figure 16-1.What is the price charged under perfect price discrimination?
A)P₃
B)P₄
C)a range of prices corresponding to the demand curve from P₃ and above
D)a range of prices corresponding to the demand curve from P₄ and above

Question

Figure 16-1
 
-Refer to Figure 16-1.What is the price charged under perfect price discrimination?
A)P₃ 
B)P₄ 
C)a range of prices corresponding to the demand curve from P₃ and above 
D)a range of prices corresponding to the demand curve from P₄ and above

Quizplus · Accepted Answer

Under perfect price discrimination, the firm charges the maximum price each consumer is willing to pay, which varies for each unit sold. Thus, the price charged for the first unit will be P₃, the price charged for the second unit will be P₄, and so on, until the price charged for the last unit sold (where quantity demanded is 1) will be equal to the maximum willingness to pay for that unit, which is the highest price on the demand curve. Therefore, the range of prices charged will correspond to the demand curve from P₃ and above.

Figure 16-1 -Refer to Figure 16-1.What Is the Price Charged Under Perfect