Compared to the monopoly outcome with a single price,imperfect price discrimination (i) sometimes raises total surplus.
(ii) sometimes lowers total surplus.
(iii) always leads to a lower quantity of output.

Question

Compared to the monopoly outcome with a single price,imperfect price discrimination (i)	sometimes raises total surplus.
(ii)	sometimes lowers total surplus.
(iii)	always leads to a lower quantity of output.

Quizplus · Accepted Answer

Imperfect price discrimination can lead to either an increase or a decrease in total surplus depending on the effectiveness of the discrimination. If the seller can successfully identify the consumer's willingness to pay and charges a higher price to those willing to pay more and a lower price to those willing to pay less, it can increase total surplus by capturing more of the consumer surplus. However, if the seller cannot accurately discriminate between consumers, it may lower the total surplus by creating consumer resentment or driving some consumers away. Imperfect price discrimination does not always lead to a lower quantity of output as it is possible for the output to remain the same or even increase if the seller can capture additional revenue from the consumers. Therefore, options (i) and (ii) are the best choices.

Compared to the Monopoly Outcome with a Single Price,imperfect Price