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)maximization 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

The practice described is first-degree price discrimination, also known as perfect price discrimination. This occurs when a firm charges each consumer the maximum price they are willing to pay, resulting in the firm capturing all consumer surplus. It is only possible if the firm has perfect information about each consumer's willingness to pay and can prevent resale or arbitrage.

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