The following figure depicts a generalized downward-sloping market demand (D)curve for a product.It also shows the firm's relevant marginal revenue (MR)curve and marginal cost (MC)curve.Use this figure to answer the following questions:

-If the firm can price discriminate perfectly,what would the producer surplus be?
A) $160
B) $120
C) $80
D) $40
E) $0

Question

The following figure depicts a generalized downward-sloping market demand (D)curve for a product.It also shows the firm's relevant marginal revenue (MR)curve and marginal cost (MC)curve.Use this figure to answer the following questions:
 
-If the firm can price discriminate perfectly,what would the producer surplus be?
A) $160 
B) $120 
C) $80 
D) $40 
E) $0

Quizplus · Accepted Answer

With perfect price discrimination, the producer can capture the entire area under the demand curve and above the supply curve, which means capturing the entire consumer surplus and converting it into producer surplus. This results in the maximum possible producer surplus.

The Following Figure Depicts a Generalized Downward-Sloping Market Demand (D)curve