The following figure shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist.
Figure 12-2
-Refer to Figure 12-2.With perfect price discrimination,the monopolist will receive producer surplus equal to the area:
A)ACFH.
B)BCFH.
C)AVFH.
D)AWEH.

Question

The following figure shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist.
Figure 12-2 
-Refer to Figure 12-2.With perfect price discrimination,the monopolist will receive producer surplus equal to the area:
A)ACFH. 
B)BCFH. 
C)AVFH. 
D)AWEH.

Quizplus · Accepted Answer

Perfect price discrimination occurs when a monopolist charges each consumer the exact maximum price they are willing to pay for the product, thus capturing all consumer surplus. In this case, price is equal to the demand curve and the monopolist produces at the point where MC = MR. The area of producer surplus in this case is the triangle AVF. The area ACFH is the deadweight loss that occurs with a single price monopolist, which is eliminated with perfect price discrimination. The area BCFH is consumer surplus, which is entirely captured by the monopolist with perfect price discrimination. The area AWEH is not relevant for calculating producer surplus.

The Following Figure Shows the Downward Sloping Demand and Marginal