How does a competitive market compare to a monopoly that engages in perfect price discrimination?
A)In both cases, total social welfare is the same.
B)Total social welfare is higher in the competitive market than with the perfectly price discriminating monopoly.
C)In both cases, some potentially mutually beneficial trades do not occur.
D)Consumer surplus is the same in both cases.

Question

Quizplus · Accepted Answer

In both a competitive market and a monopoly with perfect price discrimination, total social welfare is maximized because all mutually beneficial trades occur. However, in the monopoly, consumer surplus is zero as the monopolist captures all surplus.

How Does a Competitive Market Compare to a Monopoly That