Guzman Coleman
01/28/2023 · Junior High School
How can price discrimination improve efficiency compared to a situation in which a company must charge a single price? The price is pushed down to the level of average costs. The average cost ends up at the level of minimum average costs. The company's output is where marginal cost equals the last customer's marginal benefit. Everyone willing and able to pay for the product gets the same low price.
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Price discrimination improves efficiency by allowing companies to set prices based on consumers' willingness to pay, ensuring that the output level is where marginal cost equals the last customer's marginal benefit.
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