A firm will realize the highest level of profit if it is able to engage in
a)first-degree price discrimination.
b)second-degree price discrimination.
c)third-degree price discrimination.
d)The answer cannot be determined without additional information.
With respect to price discrimination, a firm can earn the highest
level of profit when it can capture the entire consumer
surplus.
A firm would be able to capture the entire consumer surplus when it is able to sell the good to each individual at a price which is equal to the said individual's maximum willingness to pay.
This happens when firm engages in first degree price discrimination.
So,
A firm will realize the highest level of profit if it is able to engage in first degree price discrimination.
Hence, the correct answer is the option (a).
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