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

Question

Quizplus · Accepted Answer

A perfectly price-discriminating monopolist can sell each unit of output at the maximum price that buyers are willing to pay, thus capturing all consumer surplus and producing where price equals marginal cost, which is the condition for resource-allocative efficiency. In contrast, a single-price monopolist charges the same price for all units sold, resulting in a quantity of output where marginal revenue equals marginal cost, which does not achieve resource-allocative efficiency because price exceeds marginal cost.

If a Single-Price Monopolist and a Perfectly Price-Discriminating Monopolist Face