Question

Suppose a monopolist practices perfect price discrimination. It will have A. the same total revenue but sell a larger output than if it were not practicing price discrimination. B. a greater total revenue and sell a greater output than if it were not practicing price discrimination. C. a smaller total revenue and sell a smaller output than if it were not practicing price discrimination. D. the same total revenue, but a smaller output than if it were not practicing price discrimination .

Answer 1

A monopolist that practices perfect price discrimination will have a a greater total revenue and sell a greater output than if it were not practicing price discrimination.

A monopolist is a single seller in an industry. The monopolist produces all the output in the industry. A monopolist has a downward sloping demand curve. She also sets the price for her products

Price discrimination is when the same product is sold at different prices to customers in different markets. Perfect price discrimination is when sellers charge each consumer at their reservation price in order to eliminate consumer surplus. Perfect price discrimination encourages consumers to buy more products. This increases quantity sold.

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