In first-degree price discrimination, the monopolist A)knows the equilibrium price. B)can segment the market to the fullest extent. C)charges only two different prices. D)gets less of the consumer surplus than would be taken if 2^nd degree price discrimination was practiced.

Question

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First-degree or perfect price discrimination means that the monopolist charges each customer their maximum willingness to pay, effectively segmenting the market to the fullest extent. Therefore, the monopolist can charge a different price to each customer, maximizing profits and eliminating consumer surplus. Option A is incorrect because the monopolist does not know the equilibrium price in first-degree price discrimination, as they are determining the price for each customer individually. Option C is incorrect because first-degree price discrimination can involve charging multiple prices. Option D is incorrect because first-degree price discrimination allows the monopolist to capture all consumer surplus, resulting in higher profits than any other form of price discrimination.

In First-Degree Price Discrimination, the Monopolist