In theory, perfect price discrimination:
A)increases the monopolist's profits
B)decreases consumer surplus
C)decreases deadweight loss
D)does all of the above

Question

Quizplus · Accepted Answer

Perfect price discrimination involves the monopolist charging each individual consumer their willingness to pay. This allows the monopolist to capture all of the available consumer surplus as revenue, increasing their profits. At the same time, each consumer pays a price equal to their maximum willingness to pay, leaving no additional consumer surplus. This decreases consumer surplus. However, since the monopolist is able to sell to every potential customer, there is no deadweight loss, meaning the market achieves full efficiency. Therefore, perfect price discrimination does all of the above: increases the monopolist's profits, decreases consumer surplus, and decreases deadweight loss.

In Theory, Perfect Price Discrimination