Question

First, (Perfect) degree price discrimination means that a firm charge:

Select one:

a. The maximum amount that buyers are willing to pay for each unit.

b. One single price—the maximum possible—to all of its buyers.

c. Different prices to people of different racial or ethnic backgrounds.

d. Different prices to different groups of buyers.

Answer 1

Option A.

• First degree price discrimination is a type of price discrimination that occurs when the firm's charge different prices for different customers based on their willingness and ability to pay.
• It charges them based on the maximum amount they are willing to pay for each unit.
• The firm's usually charge a greater amount for high income earners than the poor people who do not have the ability to pay for the goods even though they are unwilling to purchase them.