Suppose we compare two monopolists with identical cost and demand conditions.Monopolist A charges a single price.Monopolist B engages in price discrimination,charging a different price for different units of the product.Which one of the following statements is correct?
A)B will produce less than A,resulting in a larger deadweight loss.
B)B will generally produce more than A,resulting in less deadweight loss.
C)A will produce less than B,resulting in smaller deadweight loss.
D)A will produce more than B,and there is no deadweight loss.
E)A and B will both produce the same amount.

Question

Quizplus · Accepted Answer

B will generally produce more than A, resulting in less deadweight loss. This is because price discrimination allows Monopolist B to capture more consumer surplus, which leads to a higher output level and a lower deadweight loss.

Suppose We Compare Two Monopolists with Identical Cost and Demand