Arnie's Airlines is a monopoly airline that is able to price discriminate. If Arnie's decides to price discriminate, then
A) consumer surplus decreases.
B) Arnie's revenues decrease.
C) Arnie's will see all of his tickets at a single price.
D) Arnie's sells fewer tickets.
E) Arnie's profit decreases.

Question

Quizplus · Accepted Answer

Price discrimination allows a business to charge different prices to different consumers for the same product or service. By doing this, Arnie's Airlines can capture a greater portion of the consumer surplus, which is the difference between the price that a consumer is willing to pay and the price that they actually pay. This means that consumers will pay higher prices, and overall consumer surplus will decrease. Arnie's Airlines, on the other hand, will see an increase in revenue and profit.

Arnie's Airlines Is a Monopoly Airline That Is Able to Price