Which of the following would a firm do if it could practice perfect price discrimination?
A)Allow resale of its product.
B)Charge every buyer a different price.
C)Charge a price based on the quantity of a product bought.
D)Use odd pricing.

Question

Quizplus · Accepted Answer

Perfect price discrimination involves charging every buyer a different price based on their willingness to pay. This allows the firm to extract the maximum amount of consumer surplus and increase profits. Allowing resale of its product (A) would likely lead to price discrimination among secondary buyers, but not necessarily perfect price discrimination. Charging a price based on the quantity of a product bought (C) is an example of quantity discrimination, not perfect price discrimination. Odd pricing (D) involves setting prices just below a round number (e.g. $4.99 instead of $5.00) and is used to create a perception of value, but it does not relate to perfect price discrimination.

Which of the Following Would a Firm Do If It