When firms price discriminate, they
A)get additional surplus from consumers who would have bought at the profit-maximizing uniform price but lose sales because of the higher prices.
B)maintain surplus from existing consumers but pick up additional consumers that would not have bought at the profit-maximizing uniform price.
C)get additional surplus from consumers who would have bought at the profit-maximizing uniform price.
D)None of the above.

Question

Quizplus · Accepted Answer

When firms price discriminate, they charge different prices for the same product to different groups of consumers based on their willingness to pay. As a result, they can get additional surplus from consumers who would have bought at the profit-maximizing uniform price but are willing to pay a higher price. In other words, price discrimination allows the firm to extract more consumer surplus than they could at a uniform price, leading to higher profits for the firm. Therefore, Choice C is the correct answer.

When Firms Price Discriminate, They