If a monopolist begins to perfectly price discriminate,:
A) the deadweight loss will be eliminated as output expands to its efficient level.
B) consumer surplus will expand as prices fall.
C) the deadweight loss will increase as there are now more lost gains from trade.
D) consumer surplus is eliminated and the deadweight loss is maximized.

Question

Quizplus · Accepted Answer

Perfect price discrimination allows the monopolist to charge each consumer their maximum willingness to pay, resulting in no deadweight loss and efficient output. This is because the monopolist captures all the consumer surplus and there is no lost gains from trade. Therefore, choice A is correct as the deadweight loss will be eliminated, and output will expand to its efficient level.

If a Monopolist Begins to Perfectly Price Discriminate