Question

A monopolist that practices perfect price discrimination a. creates no deadweight loss. b. charges one group of buyers a higher price than another group, such as offering a student discount. c. charges a higher price but produces the same monopoly level of output as when a single price is charged. d. charges some customers a price below marginal cost because costs are covered by the high-priced buyers.

Answer 1

Answer:

A monopolist that practices perfect price discrimination

• a. creates no deadweight loss.

Explanation:

Theoretically, if a monopolist is able to practice perfect price discrimination:

1. marginal revenue curve = demand curve
2. consumer surplus = 0
3. every customer pays the highest amount that they are willing to pay
4. production level = perfectly competitive level of output