If a monopoly can perfectly price discriminate,
A) all the demanders pay one price.
B) it minimizes its profit.
C) it produces the same amount of output as would be produced if the market was a perfectly competitive industry.
D) it produces less output than would be produced if the market was a perfectly competitive industry.
E) it creates the same amount of consumer surplus as would be created if the market was a perfectly competitive industry.

Question

Quizplus · Accepted Answer

When a monopoly can perfectly price discriminate, it sells to each consumer at their maximum willingness to pay, which leads to the production of the same amount of output as in a perfectly competitive market. This is because the monopolist captures all the consumer surplus, turning it into producer surplus, and effectively eliminates deadweight loss by serving every consumer whose willingness to pay is above the cost of production.

If a Monopoly Can Perfectly Price Discriminate