If a firm knew every consumer's willingness to pay and could prevent arbitrage, it could charge every consumer a different price.This practice is known as
A)first-degree exploitation, or perfect price discrimination.
B)maximisation of producer surplus, or perfect price discrimination.
C)first-degree price discrimination, or perfect price discrimination.
D)first-degree transfer of consumer surplus, or perfect price discrimination.

Question

Quizplus · Accepted Answer

This practice is known as first-degree price discrimination, or perfect price discrimination. In this form of price discrimination, a firm charges each consumer their maximum willingness to pay, extracting all possible consumer surplus. By understanding each consumer's willingness to pay, the firm can charge different prices and capture more revenue. However, this practice requires the firm to have perfect information about each consumer's willingness to pay and the ability to prevent any potential arbitrage opportunities.

If a Firm Knew Every Consumer's Willingness to Pay and Could