The practice by a monopolist of charging each buyer the highest price he/she is willing to pay is called
A)first-degree discrimination.
B)second-degree discrimination.
C)third-degree discrimination.
D)fourth-degree discrimination.

Question

Quizplus · Accepted Answer

First-degree discrimination, also known as perfect price discrimination, involves charging each buyer the exact price that he/she is willing to pay. This allows the monopolist to capture all the available consumer surplus for themselves, resulting in higher profits. However, it requires the monopolist to have a very strong understanding of each individual buyer's willingness to pay, which can be difficult and costly to obtain.

The Practice by a Monopolist of Charging Each Buyer the Highest