Suppose a monopolist faces the demand curve and cost curves shown below. FIGURE 10- 4
-Refer to Figure 10- 4. If the monopolist is practicing perfect price discrimination and is maximizing its profits, the consumer surplus is represented by the area

Question

Suppose a monopolist faces the demand curve and cost curves shown below.  FIGURE 10- 4
-Refer to Figure 10- 4. If the monopolist is practicing perfect price discrimination and is maximizing its profits, the consumer surplus is represented by the area

Quizplus · Accepted Answer

Under perfect price discrimination, the monopolist charges each consumer their maximum willingness to pay, which eliminates all consumer surplus. Therefore, in this case, there is zero consumer surplus.

Suppose a Monopolist Faces the Demand Curve and Cost Curves