A common feature among perfect competition and perfect price discrimination is the elimination of
A) deadweight loss.
B) consumer surplus.
C) producer surplus.
D) market efficiency.
E) social welfare.

Question

Quizplus · Accepted Answer

In both perfect competition and perfect price discrimination, deadweight loss is eliminated. In perfect competition, price is determined by the intersection of the supply and demand curves, and all units are sold at the same price, which maximizes social welfare and eliminates deadweight loss. In perfect price discrimination, the monopolist charges each individual customer their reservation price, which maximizes profit and eliminates deadweight loss as well.

A Common Feature Among Perfect Competition and Perfect Price Discrimination