The following figure shows the costs and revenue curves of a firm in a monopoly market.

-Refer to the figure above.If this monopolist engages in the first-degree price discrimination,it will produce and sell ________ units of output.

Question

The following figure shows the costs and revenue curves of a firm in a monopoly market.
 
-Refer to the figure above.If this monopolist engages in the first-degree price discrimination,it will produce and sell ________ units of output.

Quizplus · Accepted Answer

First-degree price discrimination allows the monopolist to charge each consumer their maximum willingness to pay, capturing all consumer surplus. This results in the monopolist producing the socially optimal output level, which is where marginal cost equals demand, typically represented by Q₄ in such diagrams.

The Following Figure Shows the Costs and Revenue Curves of a Firm