Figure 14-15
-Refer to Figure 14-15.If the monopoly firm perfectly price discriminates,then the deadweight loss amounts to

Question

Figure 14-15 
-Refer to Figure 14-15.If the monopoly firm perfectly price discriminates,then the deadweight loss amounts to

Quizplus · Accepted Answer

Perfect price discrimination occurs when a firm charges each customer their individual reservation price, which means that there is no consumer surplus and no deadweight loss. In this case, since the monopolist is able to charge a higher price to those with a higher reservation price and a lower price to those with a lower reservation price, they are able to capture all of the producer surplus and there is no inefficiency in the market. Therefore, there is no deadweight loss, making choice A the correct answer.

Figure 14-15 -Refer to Figure 14-15.If the Monopoly Firm Perfectly Price Discriminates,then