The following figure shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist.
Figure 12-2
-Refer to Figure 12-2.Comparing the result of perfect competition with that of a perfectly price-discriminating monopolist,there is an efficiency loss equal to:
A)area VWE.
B)area HEF.
C)area JHFK.
D)zero.There will be no efficiency loss in either case.

Question

The following figure shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist.
Figure 12-2 
-Refer to Figure 12-2.Comparing the result of perfect competition with that of a perfectly price-discriminating monopolist,there is an efficiency loss equal to:
A)area VWE. 
B)area HEF. 
C)area JHFK. 
D)zero.There will be no efficiency loss in either case.

Quizplus · Accepted Answer

In both perfect competition and perfect price discrimination, the quantity produced is at the socially optimal level where marginal cost equals marginal benefit, resulting in no efficiency loss.

The Following Figure Shows the Downward Sloping Demand and Marginal