Price discrimination
A) eliminates the producer surplus.
B) turns consumer surplus into economic profit.
C) decreases output below the profit-maximizing level.
D) lowers a monopoly's economic profit.

Question

Quizplus · Accepted Answer

Price discrimination allows a producer to charge different prices to different groups of customers based on their willingness to pay, thereby turning some of the consumer surplus into economic profit for the producer. This increases the overall economic welfare, but also leads to higher inequality between customers. Price discrimination may also increase output and the producer surplus, but this depends on the specific market conditions and the degree of price discrimination. It does not necessarily lower a monopoly's economic profit, since price discrimination can allow a monopoly to capture more of the overall consumer surplus.

Price Discrimination