Compared to the monopoly outcome with a single price, imperfect price discrimination i) sometimes raises total surplus.
Ii) sometimes lowers total surplus.
Iii) always leads to a lower quantity of output.
A) i) and ii) only
B) ii) and iii) only
C) i) and iii) only
D) i), ii), and iii)

Question

Quizplus · Accepted Answer

Imperfect price discrimination occurs when a firm charges different prices to different consumers based on their willingness to pay. This can sometimes raise total surplus because it allows the firm to capture more consumer surplus, while still charging high prices to those with a high willingness to pay. However, it can also sometimes lower total surplus because some consumers may be priced out of the market altogether. It does not always lead to a lower quantity of output, as the firm may be able to sell more units overall by catering to different consumer groups with different price sensitivities.

Compared to the Monopoly Outcome with a Single Price, Imperfect