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 is 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 price for everyone, the seller tries to find out exactly how much each person values the item and sets the price accordingly. For example, if two people want to buy the same concert ticket, one might be willing to pay $100 while the other only $70. The seller could charge the first person $100 and the second person $70, maximizing their profit. This practice allows businesses to capture more consumer surplus, which is the difference between what customers are willing to pay and what they actually pay.
Detailed Explanation
This type of pricing means charging different amounts based on how much each person is willing to pay. Other options are incorrect because This option suggests everyone pays the same price; This option talks about discounts for buying in bulk.
Key Concepts
types of price discrimination (first-degree
Topic
Understanding Price Discrimination
Difficulty
easy level question
Cognitive Level
understand
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