If a monopolist is able to perfectly price discriminate:
A)consumer surplus is increased and deadweight loss is transformed into monopoly profit
B)consumer surplus is decreased and deadweight loss is increased
C)consumer surplus is increased and deadweight loss is increased
D)consumer surplus and deadweight losses are transformed into monopoly profits

Question

Quizplus · Accepted Answer

Perfect price discrimination allows a monopolist to charge each consumer the maximum they are willing to pay, thus capturing all consumer surplus and eliminating deadweight loss by selling to every consumer whose valuation meets or exceeds the cost of production. This results in all potential consumer surplus and what would have been deadweight loss being transformed into monopoly profits.

If a Monopolist Is Able to Perfectly Price Discriminate