Use the figure below to answer the following question. Figure 12.4.1
-Which area in Figure 12.4.1 indicates the deadweight loss from a perfect price-discriminating monopoly?
A)EACF
B)ACD
C)ABD
D)BCD
E)A perfect price-discriminating monopoly does not have a deadweight loss.

Question

Use the figure below to answer the following question.  Figure 12.4.1
-Which area in Figure 12.4.1 indicates the deadweight loss from a perfect price-discriminating monopoly?
A)EACF 
B)ACD 
C)ABD 
D)BCD 
E)A perfect price-discriminating monopoly does not have a deadweight loss.

Quizplus · Accepted Answer

A perfect price-discriminating monopoly is able to sell each unit of output at the maximum price each consumer is willing to pay, thus capturing all consumer surplus and converting it into producer surplus without leaving any unsold units that would have been valued above their cost of production. This means there is no inefficiency or deadweight loss, as the quantity produced and sold matches the socially optimal level where marginal cost equals marginal benefit.

Use the Figure Below to Answer the Following Question