Which of the following best explains why it is so difficult for firms to perfectly price discriminate?
A) It is illegal.
B) It is very difficult to know exactly every consumer's willingness to pay.
C) It is difficult to measure the marginal cost of producing an additional unit.
D) Perfect price discrimination often lowers the overall profits of a monopolist.

Question

Quizplus · Accepted Answer

Perfect price discrimination requires a firm to know the exact willingness to pay of each individual consumer, which is difficult to determine accurately. Even with data on each consumer's demographics, past purchases, and behavior, it is challenging to capture every aspect of their demand. This information asymmetry means that firms can only approximate the ideal price for each consumer, making it difficult to engage in perfect price discrimination.

Which of the Following Best Explains Why It Is So