Which of the following regarding the outcome of perfect price discrimination is true?
A) Consumer surplus increases.
B) Deadweight loss increases.
C) Producer surplus increases.
D) The economy becomes more efficient.

Question

Quizplus · Accepted Answer

Perfect price discrimination allows the monopolist to charge each customer their maximum willingness to pay, resulting in the entire consumer surplus being transferred to the producer surplus, increasing it. However, deadweight loss still occurs in perfect price discrimination as the optimal quantity produced is still lower than the socially optimal quantity. The economy may not necessarily become more efficient due to the potential loss in consumer welfare.

Which of the Following Regarding the Outcome of Perfect Price