A firm will realize the highest level of profit if it is able to engage in
A) first-degree price discrimination.
B) second-degree price discrimination.
C) third-degree price discrimination.
D) The answer cannot be determined without additional information.

Question

Quizplus · Accepted Answer

First-degree price discrimination, also known as perfect price discrimination, allows a firm to capture the entire consumer surplus by charging each consumer the maximum price they are willing to pay. This results in the highest level of profit for the firm compared to second-degree (quantity discounts) or third-degree (group discounts) price discrimination, where some consumer surplus remains.

A Firm Will Realize the Highest Level of Profit If