Suppose a Restaurant Is Trying to Determine How Much to Charge

question 7

Essay

Suppose a restaurant is trying to determine how much to charge for a bowl of chili, and decides to run an experiment to see how much its customers are willing to pay by allowing them to set their own price for this menu item.
a.Is charging a customer the price he or she is willing to pay for the bowl of chili an example of price discrimination? Briefly explain.
b.What is it called when a firm knows every consumer's willingness to pay, and can charge every consumer a different price? What happens to consumer surplus in this situation?

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Definitions:

Me

Refers to one's self-awareness or the aspect of themselves that is conscious of their personal identity and thoughts.

Authenticity

The degree to which an individual's actions are congruent with their beliefs and desires, despite external pressures.

Components

Distinct parts or elements that combine to form a whole system or complex entity.

Awareness

The state or ability to perceive, feel, or be conscious of events, objects, or sensory patterns.