Which of the following statements is TRUE about price discrimination?
A) Price discrimination makes consumers worse off due to higher prices.
B) Price discrimination leads to deadweight loss and therefore makes the market less efficient.
C) Price-discriminating monopolists often produce more output than single-price monopolists and increase total surplus in the process.
D) Price discrimination is illegal in the United States.

Question

Quizplus · Accepted Answer

Price-discriminating monopolists often produce more output than single-price monopolists because they are able to extract more revenue from consumers with higher willingness to pay, which allows them to lower the price for consumers with lower willingness to pay. This results in an increase in overall output and total surplus (consumer and producer surplus). Price discrimination is not illegal in the United States, as long as it does not involve discriminatory practices on the basis of race, gender, or other protected characteristics.

Which of the Following Statements Is TRUE About Price Discrimination