Use the figure below to answer the following questions.

Figure 13.4.6
-Prime Pharmaceuticals has developed a new asthma inhaler, for which it has a patent. An inhaler can be produced at a constant marginal cost of $2 per inhaler. The demand curve, marginal revenue curve, and marginal cost curve for this new asthma inhaler are shown in Figure 13.4.6. The patent gives Prime Pharmaceuticals a monopoly for its new inhaler. If prime Pharmaceuticals can perfectly price discriminate, deadweight loss is
A)$16 million.
B)zero.
C)$32 million.
D)$64 million.
E)$24 million.

Question

Use the figure below to answer the following questions.
  
Figure 13.4.6
-Prime Pharmaceuticals has developed a new asthma inhaler, for which it has a patent. An inhaler can be produced at a constant marginal cost of $2 per inhaler. The demand curve, marginal revenue curve, and marginal cost curve for this new asthma inhaler are shown in Figure 13.4.6. The patent gives Prime Pharmaceuticals a monopoly for its new inhaler. If prime Pharmaceuticals can perfectly price discriminate, deadweight loss is
A)$16 million. 
B)zero. 
C)$32 million. 
D)$64 million. 
E)$24 million.

Quizplus · Accepted Answer

Perfect price discrimination means that Prime Pharmaceuticals can sell the inhaler at different prices to each consumer, based on their willingness to pay. This eliminates the deadweight loss that occurs with normal monopoly pricing, where some consumers are priced out of the market. Therefore, with perfect price discrimination, there is zero deadweight loss.

Use the Figure Below to Answer the Following Questions