Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Charging different prices to different customers based on their willingness to pay
B
Charging the same price to all customers regardless of their characteristics
C
Offering discounts to bulk buyers only
D
Setting a single price for a product in different markets
Understanding the Answer
Let's break down why this is correct
Answer
First-degree price discrimination occurs when a seller charges each customer the highest price they are willing to pay for a product or service. This means that instead of having one single price for everyone, the seller tries to understand how much each person values the item and sets a unique price for each individual. For example, if a concert ticket costs $100, one person might be willing to pay $150, while another might only pay $80. The seller would ideally charge each person their maximum willingness to pay, maximizing their profits. This type of pricing can be challenging to implement because it requires detailed knowledge of each customer's preferences and willingness to pay.
Detailed Explanation
This type of pricing means charging each customer what they are willing to pay. Other options are incorrect because Some might think that all customers pay the same price; Offering discounts to bulk buyers seems like price discrimination, but it only targets quantity, not individual willingness to pay.
Key Concepts
types of price discrimination (first-degree
Topic
Understanding Price Discrimination
Difficulty
easy level question
Cognitive Level
understand
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