Which of the following is true for a monopolist that engages in perfect price discrimination?
A)Perfect price discrimination restricts the total output produced by the monopolist.
B)Perfect price discrimination allows the monopolist to just break even and transfers the gain to consumers.
C)Perfect price discrimination results in the maximization of consumer surplus.
D)Perfect price discrimination creates a deadweight loss.
E)Perfect price discrimination allows the monopolist to reap the entire gains from production.

Question

Quizplus · Accepted Answer

Perfect price discrimination allows the monopolist to charge each individual consumer their maximum willingness to pay, resulting in the entire gains from production being captured by the monopolist. Therefore, choice E is the correct answer. Choices A, B, and C are incorrect as they imply some level of inefficiency or loss to the consumer, which is not the case with perfect price discrimination. Choice D is also incorrect, as there is no deadweight loss in perfect price discrimination.

Which of the Following Is True for a Monopolist That