Which of the following conditions must be TRUE for perfect price discrimination?
I. The seller must have very good information about the buyer's willingness to pay.
II. Marginal revenue must equal demand.
III. The marginal cost of production must be constant.
A) I only
B) I and II only
C) I and III only
D) I, II, and III

Question

Quizplus · Accepted Answer

Perfect price discrimination requires the seller to have very good information about the buyer's willingness to pay (I) because they need to charge each buyer their maximum willingness to pay. Marginal revenue must equal demand (II) because the seller needs to set the price for each unit at the buyer's maximum willingness to pay. However, marginal cost of production does not have to be constant (III) for perfect price discrimination to occur.

Which of the Following Conditions Must Be TRUE for Perfect