The correct answer is: All of the above.
Perfect price discrimination is a theoretical concept in which a monopolist can charge each consumer the maximum price they are willing to pay for a good or service. This is also known as first-degree price discrimination.
Second degree price discrimination occurs when a monopolist charges different prices for different units of a good or service, but all consumers pay the same price for each unit. This is also known as block pricing.
Third degree price discrimination occurs when a monopolist charges different prices to different groups of consumers, based on their willingness to pay. This is also known as market segmentation.
All three types of price discrimination can be considered optimal pricing, as they allow the monopolist to extract more surplus from consumers. However, perfect price discrimination is the most efficient form of price discrimination, as it results in the highest level of consumer surplus.
Here is a more detailed explanation of each type of price discrimination:
- Perfect price discrimination is a theoretical concept in which a monopolist can charge each consumer the maximum price they are willing to pay for a good or service. This is also known as first-degree price discrimination. Perfect price discrimination is the most efficient form of price discrimination, as it results in the highest level of consumer surplus. However, it is also the most difficult to achieve, as it requires the monopolist to have perfect information about each consumer’s willingness to pay.
- Second degree price discrimination occurs when a monopolist charges different prices for different units of a good or service, but all consumers pay the same price for each unit. This is also known as block pricing. Second degree price discrimination is less efficient than perfect price discrimination, as it results in a lower level of consumer surplus. However, it is easier to achieve than perfect price discrimination, as it does not require the monopolist to have perfect information about each consumer’s willingness to pay.
- Third degree price discrimination occurs when a monopolist charges different prices to different groups of consumers, based on their willingness to pay. This is also known as market segmentation. Third degree price discrimination is less efficient than perfect price discrimination, but it is more efficient than second degree price discrimination. It is also easier to achieve than perfect price discrimination or second degree price discrimination, as it does not require the monopolist to have perfect information about each consumer’s willingness to pay.