Relative to a single-price monopoly,the effect of group price discrimination on social welfare is
A) beneficial.
B) detrimental.
C) neutral.
D) ambiguous.

Question

Quizplus · Accepted Answer

The effect of group price discrimination on social welfare is ambiguous because it depends on the specific circumstances of the market. On one hand, it can increase profits for the monopolist and potentially lead to lower prices for some consumers in the discriminated group, which is beneficial. On the other hand, it can decrease consumer surplus and limit the ability of the non-discriminated group to purchase the good or service, which is detrimental. Therefore, it is unclear whether group price discrimination would have a positive or negative overall impact on social welfare.

Relative to a Single-Price Monopoly,the Effect of Group Price Discrimination