The term 'perfect price discrimination' means charging:

• A. each consumer the maximum price they are willing to pay for each unit
• B. different prices to groups of consumers based on observable characteristics
• C. all consumers the same price regardless of their willingness to pay
• D. a lower price for additional units purchased by the same consumer

Answer: (A)

Verified step by step guidance

1. Understand the concept of price discrimination, which occurs when a seller charges different prices to different consumers for the same good or service, based on their willingness to pay or other factors.
2. Recognize that 'perfect price discrimination' (also called first-degree price discrimination) means charging each consumer the maximum price they are willing to pay for each unit of the good, capturing all consumer surplus.
3. Contrast this with other types of price discrimination: second-degree (different prices based on quantity purchased) and third-degree (different prices to groups based on observable characteristics).
4. Note that charging all consumers the same price regardless of willingness to pay is uniform pricing, not price discrimination.
5. Therefore, perfect price discrimination specifically refers to charging each consumer their individual maximum willingness to pay for each unit, extracting the full consumer surplus.