If a monopoly can perfectly price discriminate, then its marginal revenue curve will be
A) the same as its marginal cost curve.
B) the same as its demand curve.
C) a vertical line at the profit-maximising quantity of output.
D) the same as its supply curve.
E) undefined because it does not exist.

Question

Quizplus · Accepted Answer

When a monopoly perfectly price discriminates, it is able to charge each customer the maximum they are willing to pay for each unit of the good or service. This means that the demand curve for each individual customer becomes the monopolist's marginal revenue curve. Therefore, the marginal revenue curve will look like the demand curve, and thus be the same as choice B.

If a Monopoly Can Perfectly Price Discriminate, Then Its Marginal