First-degree price discrimination
A)occurs when a firm charges each consumer the maximum price he or she would be willing to pay for each unit of the good purchased.
B)results in the firm extracting all surplus from consumers.
C)occurs when a firm charges each consumer the maximum price he or she would be willing to pay for each unit of the good purchased and results in the firm extracting all surplus from consumers.
D)none of the statements associated with this question are correct.

Question

Quizplus · Accepted Answer

First-degree price discrimination is the practice of charging each individual customer the maximum price that they would be willing to pay for each unit of a good or service. This allows the seller to capture all of the available consumer surplus and maximize their profits. Therefore, C is the correct choice as it combines both parts of the definition.

First-Degree Price Discrimination