If a perfectly competitive firm and a perfectly price-discriminating monopolist face the same demand and cost curves, then
A)the competitive firm will attain resource-allocative efficiency, but the monopolist will not.
B)the competitive firm will attain resource-allocative efficiency, but the monopolist may or may not, depending upon the demand for its product.
C)the competitive firm will not attain resource-allocative efficiency, but the monopolist will.
D)both the competitive firm and the monopolist will attain resource-allocative efficiency.
E)neither the competitive firm nor the monopolist will attain resource-allocative efficiency.

Question

Quizplus · Accepted Answer

Both a perfectly competitive firm and a perfectly price-discriminating monopolist can achieve resource-allocative efficiency. In a perfectly competitive market, firms produce at a point where price equals marginal cost, which is the condition for resource-allocative efficiency. A perfectly price-discriminating monopolist can also achieve this by charging each consumer their maximum willingness to pay, effectively capturing the entire area under the demand curve and also producing where price equals marginal cost for each unit sold.

If a Perfectly Competitive Firm and a Perfectly Price-Discriminating Monopolist