In first-degree price discrimination
A)The monopolist knows the equilibrium price
B)The monopolist segments the market
C)The monopolist charges only two different prices
D)The monopolist gets less of the consumer surplus than would be taken if 2nd degree price discrimination was practiced

Question

Quizplus · Accepted Answer

In first-degree price discrimination, the monopolist segments the market based on each individual consumer's willingness to pay, allowing the monopolist to charge a different price to each consumer. This allows the monopolist to extract all of the available consumer surplus and maximize profits. The monopolist does not know the equilibrium price or charge only two different prices, as is the case in second-degree price discrimination. Additionally, the monopolist can potentially take more consumer surplus through first-degree price discrimination compared to second-degree price discrimination.

In First-Degree Price Discrimination