Refer to the information provided in Figure 13.11 below to answer the question(s) that follow. Figure 13.11
-Refer to Figure 13.11. Suppose a monopolist faces the demand and costs in the figure and is able to perfectly price discriminate. What is the economic welfare loss from having a monopoly instead of a perfectly competitive industry supplying widgets?
A) $0
B) $4,000
C) $16,000
D) Indeterminate from the given information.

Question

Refer to the information provided in Figure 13.11 below to answer the question(s) that follow.  Figure 13.11
-Refer to Figure 13.11. Suppose a monopolist faces the demand and costs in the figure and is able to perfectly price discriminate. What is the economic welfare loss from having a monopoly instead of a perfectly competitive industry supplying widgets?
A) $0 
B) $4,000 
C) $16,000 
D) Indeterminate from the given information.

Quizplus · Accepted Answer

When a monopolist is able to perfectly price discriminate, they sell each unit of output at the maximum price that consumers are willing to pay for that unit. This means they capture all consumer surplus, converting it into producer surplus, but they also produce the socially optimal quantity of output, just like in a perfectly competitive market. Therefore, there is no deadweight loss, and the economic welfare loss from having a monopoly in this case is $0.

Refer to the Information Provided in Figure 13