Perfect price discrimination
A)is a common occurrence in situations with many buyers.
B)occurs fairly often in situations with only a few buyers.
C)is only observed in competitive markets.
D)rarely occurs because firms do not have sufficient power to differentiate among specific buyers.

Question

Quizplus · Accepted Answer

Perfect price discrimination, or charging each customer their maximum willingness to pay, is rarely observed in practice because it requires firms to have perfect information about each buyer's willingness to pay and the ability to charge different prices to different buyers. In most markets, firms do not have this level of power or information, and so imperfect price discrimination strategies are used instead.

Perfect Price Discrimination