Price discrimination increases producer surplus for a monopolist.

Question

Quizplus · Accepted Answer

Price discrimination allows a monopolist to charge different prices to different groups of consumers for the same product, based on their willingness to pay. This ultimately results in an increase in the total revenue earned by the monopolist, and thus an increase in producer surplus. By charging a higher price to consumers with a higher willingness to pay, the monopolist is able to capture more consumer surplus, which translates into higher profits for the producer.

Price Discrimination Increases Producer Surplus for a Monopolist