If a monopolist is able to perfectly price discriminate,
A)consumer surplus is always increased.
B)total surplus is always decreased.
C)consumer surplus and deadweight losses are transformed into monopoly profits.
D)the price effect dominates the output effect on monopoly revenue.

Question

Quizplus · Accepted Answer

Perfect price discrimination allows a monopolist to charge each consumer the maximum they are willing to pay, thus capturing what would have been consumer surplus and deadweight loss as monopoly profit. This process does not inherently increase consumer surplus or total surplus; instead, it reallocates consumer surplus to the monopolist, reducing or eliminating deadweight loss.

If a Monopolist Is Able to Perfectly Price Discriminate