Exhibit 9.15

-Refer to Exhibit 9.15 which shows the cost and revenue curves faced by a monopolist.The area _____ represents monopoly profit with perfect price discrimination.

Question

Exhibit 9.15
 
-Refer to Exhibit 9.15 which shows the cost and revenue curves faced by a monopolist.The area _____ represents monopoly profit with perfect price discrimination.

Quizplus · Accepted Answer

Perfect price discrimination occurs when the monopolist charges each customer the maximum price they are willing to pay, resulting in no consumer surplus. The monopolist captures all the surplus as profit. In the graph, the triangle created by a, b, and e represents the consumer surplus that the monopolist could capture through price discrimination. Therefore, monopoly profit with perfect price discrimination would be equal to the area of this triangle, which is a + b + e.

Exhibit 9.15 -Refer to Exhibit 9.15 Which Shows the Cost and Revenue