When a firm has a monopoly in a market and also perfectly price discriminates,total welfare
A) is maximized.
B) is lower than in a perfectly competitive market.
C) is higher than in a perfectly competitive market.
D) is minimized.

Question

Quizplus · Accepted Answer

When a firm has a monopoly in a market and also perfectly price discriminates, it is able to capture all consumer surplus for itself. This results in the firm producing the quantity of output where marginal cost equals marginal revenue, i.e. efficient output, and also capturing all the surplus that would otherwise have been available to consumers. Therefore, total welfare is maximized.

When a Firm Has a Monopoly in a Market and Also