The table given below shows the price, marginal revenue and marginal cost of a monopolist at different levels of the output. The firm does not incur a fixed cost of production.Table 11.4

-Which of the following is true of a firm that can successfully practice price discrimination?
A)Its total revenue is often reduced.
B)It appropriates a part of the consumer surplus.
C)It has no way of distinguishing between types of customers.
D)It has no market power in the industry.
E)It must be a perfectly competitive firm.

Question

The table given below shows the price, marginal revenue and marginal cost of a monopolist at different levels of the output. The firm does not incur a fixed cost of production.Table 11.4
 
-Which of the following is true of a firm that can successfully practice price discrimination?
A)Its total revenue is often reduced. 
B)It appropriates a part of the consumer surplus. 
C)It has no way of distinguishing between types of customers. 
D)It has no market power in the industry. 
E)It must be a perfectly competitive firm.

Quizplus · Accepted Answer

Price discrimination involves charging different prices to different groups of consumers based on their willingness to pay. This allows the firm to increase its profits by capturing a portion of the consumer surplus. Therefore, option B is the correct answer. Options A, C, D, and E are incorrect because they do not describe the characteristics of a firm that practices price discrimination.

The Table Given Below Shows the Price, Marginal Revenue and Marginal