Perfect price discrimination occurs when:
A)each customer is charged the maximum price that each is willing and able to pay.
B)two classes of customers are charged different prices as they have different elasticities of demand.
C)senior citizens are offered restaurant discounts.
D)the firm sets MR

Question

Perfect price discrimination occurs when:
A)each customer is charged the maximum price that each is willing and able to pay.
B)two classes of customers are charged different prices as they have different elasticities of demand.
C)senior citizens are offered restaurant discounts.
D)the firm sets MR < MC for each class of customers.
E)the firm charges same price to different customers so that it is equal to the equilibrium price.

Quizplus · Accepted Answer

Perfect price discrimination occurs when each customer is charged the maximum price that they are willing and able to pay. This means that the seller is able to extract all consumer surplus and the entire market surplus is captured by the seller. In other words, the seller charges each customer their reservation price, which is the maximum price they are willing to pay for a good or service.

Perfect Price Discrimination Occurs When