-Refer to the graph above.If this monopolist applies perfect price discrimination,it will produce _______ units of output.
A) 0
B) 3.5
C) 7
D) between 0 and 3.5
E) more than 7

Question

-Refer to the graph above.If this monopolist applies perfect price discrimination,it will produce _______ units of output.
A) 0 
B) 3.5 
C) 7 
D) between 0 and 3.5 
E) more than 7

Quizplus · Accepted Answer

In perfect price discrimination, a monopolist produces where marginal cost equals marginal revenue, which is also the point where the demand curve intersects the marginal cost curve. This typically results in the monopolist producing the socially optimal quantity, which is the same as a competitive market, often at the point where the demand curve intersects the marginal cost curve.

-Refer to the Graph Above