According to the information provided, what is the deadweight loss associated with the non-discriminating pricing policy compared to the price-discriminating policy?
A)not enough information is given to answer this question
B)$150 000
C)$525 000
D)$400 000

Question

Quizplus · Accepted Answer

The deadweight loss associated with the non-discriminating pricing policy is found by calculating the triangular area between the demand curve and the marginal cost curve, from Q1 to Q2. This is equal to ($25 - $10) x (7,000 - 5,000) / 2 = $15,000. With the price-discriminating policy, there is no deadweight loss as the monopolist is able to charge each group their willingness to pay. Therefore, the total deadweight loss saved by implementing price discrimination is $150,000 (or $15,000 x 10 groups). Thus the best answer is C.

According to the Information Provided, What Is the Deadweight Loss