Arnie's Airlines is a monopoly airline that is able to price discriminate. If Arnie's decides to price discriminate, then
A) Arnie's profit increases.
B) Arnie's revenues decrease.
C) consumer surplus increases.
D) Arnie's sells fewer tickets.
E) Arnie can no longer set a price that depends upon the buyer's willingness to pay.

Question

Quizplus · Accepted Answer

Price discrimination allows a firm to charge higher prices to those with a higher willingness to pay and lower prices to those with a lower willingness to pay. This enables the firm to increase its profits by capturing more of the total consumer surplus. Therefore, Arnie's profit would increase if it decides to price discriminate.

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