Which of the following statements about a monopoly practicing perfect price discrimination is correct?

Question

Quizplus · Accepted Answer

In perfect price discrimination, the monopolist is able to charge each consumer their maximum willingness to pay, which means that the demand curve for each consumer becomes the marginal revenue curve. This allows the monopolist to produce at a level where marginal revenue equals marginal cost, just like in perfect competition. However, the monopolist will be able to capture all the consumer surplus and obtain higher profits compared to a single-price monopolist. The output level is not determined by the practice of price discrimination, but rather by the profit-maximizing level of output. Total costs may or may not be lower depending on the cost structure of the monopolist.

Which of the Following Statements About a Monopoly Practicing Perfect