A monopolist that practices perfect price discrimination
A)creates no deadweight loss.
B)charges one group of buyers a higher price than another group, such as offering a student discount.
C)charges a higher price but produces the same monopoly level of output as when a single price is charged.
D)charges some customers a price below marginal cost because costs are covered by the high-priced buyers.

Question

Quizplus · Accepted Answer

A monopolist that practices perfect price discrimination charges each customer their willingness to pay, resulting in no deadweight loss. This is because, under perfect price discrimination, the monopoly produces the socially optimal level of output, as every unit is sold at the highest price each customer is willing to pay. Therefore, there is no consumer surplus left unexploited, and no deadweight loss arises.

A Monopolist That Practices Perfect Price Discrimination