When a monopoly practices price discrimination
A)it charges different prices to different consumers and transfers some of the consumer surplus to economic profit.
B)it produces a smaller quantity than when it is a single-price monopoly which decreases consumer surplus.
C)new firms enter the industry,so buyers have more goods from which to choose and consumer surplus increases.
D)consumer surplus increases because the monopoly increases the quantity available for sale.
E)firms exit the industry and consumer surplus decreases.

Question

Quizplus · Accepted Answer

When a monopoly practices price discrimination, it charges different prices to different consumers based on their willingness to pay, and thus transfers some of the consumer surplus to economic profit. This results in a decrease in consumer surplus for some buyers, but an increase in profit for the monopoly.

When a Monopoly Practices Price Discrimination