Table of contents

0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 26m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

12. Monopoly

Price Discrimination

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Multiple Choice

If the firm's marginal cost is constant at $3.00, the perfect price discriminating firm will charge each customer:

A different price

Previous problem

Verified step by step guidance

Understand the concept of perfect price discrimination: A firm practicing perfect price discrimination charges each customer the maximum price they are willing to pay, capturing all consumer surplus as profit.

Recognize that in perfect price discrimination, the firm will charge each customer a different price based on their individual willingness to pay, rather than a single market price.

Identify that the marginal cost (MC) of $3.00 is the cost of producing one more unit of the good. In perfect price discrimination, the firm will continue to sell additional units as long as the price each customer is willing to pay is greater than or equal to the MC.

Since the firm charges each customer their maximum willingness to pay, the price charged to each customer will vary and is not fixed at $3, $5, or $8.

Conclude that the correct answer is that the firm will charge each customer a different price, reflecting their individual willingness to pay, rather than a uniform price across all customers.