Figure 15-17
-Refer to Figure 15-17. Which of the following statements best describes the changes that would occur if this firm were to switch from operating as a single price profit-maximizing monopolist to perfect price discrimination?
A)The quantity would increase from I to J, the profit would increase from BCFE to ACG, and the deadweight loss would decrease from EFG to zero.
B)The quantity would remain constant, the profit would increase from BCFE to ABCFE and the deadweight loss would decrease from EFG to zero.
C)The quantity would decrease from J to I, the profit would decrease from ACG to BCFE, and the deadweight loss would increase from EFG to ACG.
D)The quantity would increase from I to J, the profit would decrease from BCFE to EFG, and the deadweight loss remain constant.

Question

Figure 15-17 
-Refer to Figure 15-17. Which of the following statements best describes the changes that would occur if this firm were to switch from operating as a single price profit-maximizing monopolist to perfect price discrimination?
A)The quantity would increase from I to J, the profit would increase from BCFE to ACG, and the deadweight loss would decrease from EFG to zero. 
B)The quantity would remain constant, the profit would increase from BCFE to ABCFE and the deadweight loss would decrease from EFG to zero. 
C)The quantity would decrease from J to I, the profit would decrease from ACG to BCFE, and the deadweight loss would increase from EFG to ACG. 
D)The quantity would increase from I to J, the profit would decrease from BCFE to EFG, and the deadweight loss remain constant.

Quizplus · Accepted Answer

If the firm were to switch from operating as a single price profit-maximizing monopolist to perfect price discrimination, it would be able to charge each individual customer their willingness to pay for the product. This means that the firm would capture all consumer surplus and eliminate the deadweight loss that is present in a single price model. 
As a result, the quantity demanded would increase from I to J, since individual consumers would be willing to purchase more at a lower price. The profit would also increase from BCFE to ACG, since the firm is now able to capture all of the consumer surplus that was previously lost. Finally, the deadweight loss would decrease from EFG to zero, since perfect price discrimination eliminates all deadweight loss.

Figure 15-17 -Refer to Figure 15-17. Which of the Following Statements Best