Which of the following statements is not correct? First-degree price discriminat

Question

Which of the following statements is not correct? First-degree price discrimination works to increase a firm's profits by converting consumer surplus into revenue for the firm, while third-degree price discrimination increases a firm's profits by more accurately assessing the willingness to pay of different groups of consumers. First-degree and third-degree price discrimination work to increase a firm's profits by more accurately matching willingness to pay to the marginal costs of production. Because it focuses on more accurately assessing the willingness to pay of different groups of consumers, third-degree price discrimination will increase a firm's profits more than will first-degree price discrimination. First-degree and third-degree price discrimination work to increase a firm's profits by converting consumer surplus into revenue for the firm.

Explanation / Answer

Option b) and Option d) both are not correct.

Explanation:- First-degree price discrimination increases the profits of firm by converting consumer surplus into revenue for the firm. Therefore, profits in case of first-degree price discrimination equals to summation of producer surplus as well as the consumer surplus. However, The Third-degree price discrimination increases the profits of firm by accurately matching willingness to pay to the marginal costs of production.

Conclusion:- Option b) as well as Option d) both are not correct

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