All of the following statements,except one,are correct in short-run equilibrium for both a single-price monopolist and a monopolist that practices perfect price discrimination.Assume that both firms are able to earn at least a normal profit.Which statement is the exception?
A)Both face downward-sloping demand curves for their output.
B)Both produce all output units for which marginal revenue exceeds marginal cost.
C)Both produce in the range where marginal revenue is positive.
D)Both are price setters.
E)Both produce an output level for which price exceeds marginal cost.

Question

Quizplus · Accepted Answer

A single-price monopolist produces an output level where marginal revenue equals marginal cost, which is typically lower than the output level that maximizes social welfare. Thus, the price exceeds the marginal cost, resulting in deadweight loss. On the other hand, a monopolist that practices perfect price discrimination produces an output level where marginal cost equals marginal revenue for each unit of output, which allocates resources efficiently and eliminates deadweight loss. Therefore, in perfect price discrimination, the price equals the marginal cost. Hence, statement E is incorrect for perfect price discrimination.

All of the Following Statements,except One,are Correct in Short-Run Equilibrium