When a firm is able to engage in perfect price discrimination,its marginal revenue curve
A) lies below its demand curve.
B) is the same as its demand curve.
C) lies above its demand curve.
D) is the same as its supply curve.
E) is undefined because it does not exist.

Question

Quizplus · Accepted Answer

When a firm engages in perfect price discrimination, it can charge each customer the maximum price they are willing to pay, which is equivalent to the customer's marginal utility. Therefore, the marginal revenue of the firm will be equal to the demand curve, as the firm is able to sell each unit at the highest price each customer is willing to pay.

When a Firm Is Able to Engage in Perfect Price