A perfect price-discriminating monopoly
A)has a demand curve that is also its marginal revenue curve.
B)maximizes total revenue.
C)is inefficient.
D)will produce the quantity at which the marginal cost curve intersects its demand curve.
E)both A and D

Question

Quizplus · Accepted Answer

A perfect price-discriminating monopoly charges each customer their maximum willingness to pay, which varies person to person. This means it can extract all consumer surplus and maximize total revenue. Since there are no price differences, the demand curve is also the marginal revenue curve. The monopolist will produce at the quantity at which the marginal cost curve intersects its demand curve, which is the allocatively efficient quantity. However, since it charges different prices to different customers, it is not productively efficient.

A Perfect Price-Discriminating Monopoly