Finally, we'll briefly look at perfect price discrimination or 1st degree price discrimination. If a firm can determine the exact marginal willingness to pay for each consumer and each unit it could charge a different price for each unit (for review see Surplus under Consumer Choice). As we said, this would require a Psychic Cash Registers® or some other psychic device as well as the ability to prevent resale.

    If a firm could do this its Demand curve would be its Marginal Revenue curve, Price would equal MC and profits would be very large. There would be no consumers' surplus at all. What would normally be surplus would go to the firm as extra profit.

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