Which of the following is observed when perfect price discrimination is practiced by a monopolist?
A)Profit is lower than it would be without discrimination.
B)Total revenue is lower than it would be without discrimination.
C)Average revenue is less than average cost.
D)Consumer surplus is zero.
E)Profit is zero.

Question

Quizplus · Accepted Answer

When perfect price discrimination is practiced, the monopolist charges each consumer the maximum price they are willing to pay, resulting in no consumer surplus. However, the monopolist can capture all the surplus as profit, so their profits will be higher than if they sold at a uniform price. Therefore, profit is not lower and can be positive. Total revenue will also be higher than without discrimination. However, average revenue will not necessarily be lower than average cost.

Which of the Following Is Observed When Perfect Price Discrimination