Perfect Price Discrimination Occurs When

question 24

Multiple Choice

Perfect price discrimination occurs when:

• A)each customer is charged the maximum price that each is willing and able to pay.
• B)two classes of customers are charged different prices as they have different elasticities of demand.
• C)senior citizens are offered restaurant discounts.
• D)the firm sets MR < MC for each class of customers.
• E)the firm charges same price to different customers so that it is equal to the equilibrium price.

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Definitions:

Demand

Describes the amount of a product or service that buyers are ready and can afford to buy at different prices over a specific time frame.

Book

A written or printed work consisting of pages glued or sewn together along one side and bound in covers.

Profit-Maximizing

The process or strategy employed by a firm to adjust its production and prices to achieve the highest possible profit.

Price Elasticity

A quantitative representation of how quantity demanded or supplied of a product changes in response to a price change, signifying the sensitivity of consumers or producers to price variations.