Other things equal, in which of the following cases would economic profit be the greatest?
A) an unregulated monopolist that is able to engage in price discrimination
B) an unregulated, nondiscriminating monopolist
C) a regulated monopolist charging a price equal to average total cost
D) a regulated monopolist charging a price equal to marginal cost

Question

Quizplus · Accepted Answer

Price discrimination allows the monopolist to charge a higher price to customers with a less elastic demand, which increases total revenue and hence economic profit. This ability to price discriminate is not available to the non-discriminating monopolist or the regulated monopolist.

Other Things Equal, in Which of the Following Cases Would