Question

perfect (first degree) price discrimination:a. is a common occurrence in situations with many buyers.b. occurs fairly often in situations with only a few buyers.c. is only observed in competitive markets.d. rarely occurs because firms do not have sufficient information todifferentiate among specific buyers.

Answer 1

Perfect price discrimination is a scenario where a monopolist is able to charge each buyer the maximum price they are willing to pay for a product. This occurs when the monopolist has sufficient information about each buyer's preferences and willingness to pay.

Step-by-step explanation:

Perfect price discrimination is a scenario where a monopolist is able to charge each buyer the maximum price they are willing to pay for a product. This occurs when the monopolist is able to gather sufficient information about each buyer's preferences and willingness to pay. As a result, there is no consumer surplus because each buyer is paying exactly what they think the product is worth.

This form of price discrimination is often observed in industries with only a few buyers, as the monopolist can invest resources in gathering information about each buyer's preferences. It is rare in competitive markets because firms generally do not have the necessary information to differentiate among specific buyers.