Comparing a price-discriminating monopoly firm with a single-price monopoly,one tends to find that price discrimination:
A)increases the inefficiency of the market.
B)reduces economic profits.
C)typically increases total output.
D)results in lower input prices.

Question

Quizplus · Accepted Answer

Price discrimination typically increases total output as the firm can capture more consumer surplus by charging higher prices to those with a higher willingness to pay, while still attracting those with a lower willingness to pay at a lower price. This allows the firm to sell more units overall and potentially increase overall welfare in the market. Additionally, price discrimination can increase economic profits for the firm as they are able to capture more surplus. Price discrimination may result in inefficiencies, but not necessarily more than a single-price monopoly. It also does not necessarily result in lower input prices.

Comparing a Price-Discriminating Monopoly Firm with a Single-Price Monopoly,one Tends