A difference between a perfectly competitive market equilibrium and a perfect price discrimination equilibrium is that in a competitive market ________, whereas in perfect price discrimination ________.
A)all units are sold where P = MC; only the last unit sold is at P = MC
B)deadweight loss varies depending on the shape of the MC curve; deadweight loss increases
C)consumers are better off; producers lose some sales due to high prices.
D)All of the above.

Question

Quizplus · Accepted Answer

In a perfectly competitive market equilibrium, all units are sold where P = MC, whereas in perfect price discrimination, only the last unit sold is at P = MC. This is because in perfect price discrimination, the seller can charge each customer their maximum willingness to pay, whereas in a competitive market, they must charge the same price for every unit sold. This leads to a difference in the pricing strategy and equilibrium outcome between the two. The other choices are not correct.

A Difference Between a Perfectly Competitive Market Equilibrium and a Perfect