Suppose a Restaurant Is Trying to Determine How Much to Charge

question 59

Essay

Suppose a restaurant is trying to determine how much to charge for a bowl of chilli, 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 chilli 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:

Coverslip

A very thin piece of glass or plastic used to cover specimens on a microscope slide for examination.

Opaque

Describing a material or substance that does not allow light to pass through; not transparent or translucent.

Compound Light Microscope

A microscope that uses a series of lenses to magnify objects in steps, using visible light for illumination.

High Power Objective

A microscope lens with high magnification, used for observing fine details of the specimen being studied.