Perfect Price Discrimination Occurs When a Firm Is Able to

question 7

Multiple Choice

Perfect price discrimination occurs when a firm is able to

• A) charge each buyer the highest price that he or she is willing to pay for the good.
• B) identify at least two different groups of buyers.
• C) determine the difference between a seller's reservation price and the buyer's reserve price.
• D) prevent frequent reselling of its product.
• E) determine the prices that should be charged to generate the largest amount of consumer surplus.

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Definitions:

Long Run

A time frame in economics where all factors of production can be varied, allowing for full adjustment to changes.

Marginal Revenue

The enhanced earnings a business receives by selling one more unit of its goods or services.

Marginal Cost

The swell in overall financial outlay resulting from the crafting of an extra unit of a good or service.

Profit-Maximization

A business objective to achieve the highest possible profit through managing revenues and expenses, often central to the decisions made by firms.