A firm that engages in perfect price discrimination produces more output to maximize its profits than it would if it charged only one price.

Question

Quizplus · Accepted Answer

In perfect price discrimination, a firm charges different prices to different customers based on their willingness to pay. This allows the firm to capture consumer surplus and maximize its profits. Since each customer is willing to pay a different price, the firm can produce more output and sell it at higher prices to different customers, leading to higher overall profits compared to charging a single price. Therefore, a firm engaging in perfect price discrimination will produce more output to maximize its profits.

A Firm That Engages in Perfect Price Discrimination Produces More