Question

12. Market efficiency and perfect price discrimination Perfect price discrimination is efficient because it converts what would have been deadweight loss into consumer and producer surplus inefficient because it converts a portion of consumer surplus into producer surplus inefficient because it results in no consumer surplus efficient because it converts into producer surplus what had been consumer surplus and deadweight loss

Answer 1

Market efficiency and perfect price discrimination is efficient because it efficient because it converts into producer surplus what had been consumer surplus and deadweight loss.

Perfect price discrimination allows a firm to be more efficient by making it sell at more output level. The firm would have more efficiency level at its factors of production.

Answer 2

Market efficiency is achieved with perfect price discrimination because what would have been dead-weight loss is converted into consumer and producer surplus through perfect price discrimination.

For the market, efficiency is achieved because the dead-weight loss is converted into producer and consumer surpluses, with enormous benefits to the society.

Thus, perfect price discrimination achieves allocation efficiency for both the producer and the consumer (or the society as a whole).

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