FIGURE 7 PERFECT PRICE DISCRIMINATION
With perfect price discrimination, firms charge each customer the maximum price each is willing to pay in order to extract all consumer surplus. Thus, every point on the demand curve in this figure represents a price. The first few customers—those who value the product most—are charged the highest price. The next customers are charged slightly lower prices, and so on, until the last unit is sold for PC (point b). As a result, a perfectly discriminating monopolist earns profits represented by the shaded area PCPTb. This is considerably more profit than the monopolist would earn by selling QM units at price PM, represented by area PCPMac.