When first-degree price discrimination is perfectly implemented
A) social gain is maximized,with all gains going to the monopoly.
B) consumers' surplus and producer's surplus are both larger than in the case of simple monopoly.
C) the resulting deadweight loss is larger than if the monopoly did not price discriminate.
D) the consumers' and producer's gains from trade are identical to those in a competitive market.

Question

Quizplus · Accepted Answer

First-degree price discrimination, when perfectly implemented, allows the monopolist to capture the entire consumer surplus, turning it into producer surplus. This maximizes the monopolist's gains but does not necessarily increase overall social welfare compared to a non-discriminating monopoly, as it simply redistributes surplus from consumers to the monopolist.

When First-Degree Price Discrimination Is Perfectly Implemented