Under conditions of first-degree price discrimination
A)production will equal that which would exist under perfect competition.
B)production will exceed that which would prevail under perfect competition.
C)prices will be lower than under perfect competition.
D)production will always be lower than under perfect competition.

Question

Quizplus · Accepted Answer

First-degree price discrimination, also known as perfect price discrimination, occurs when a seller charges each buyer their maximum willingness to pay. This leads to an allocation of resources that is equivalent to what would be seen under perfect competition, where production is at a level where price equals marginal cost for each unit sold. This maximizes both consumer surplus and producer surplus, leading to an efficient market outcome similar to perfect competition.

Under Conditions of First-Degree Price Discrimination