Suppose a monopolist practices perfect price discrimination. Its marginal revenue curve
A)will lie below its demand curve.
B)will lie above its demand curve.
C)will coincide with its demand curve.
D)has no definite relationship with its demand curve.

Question

Quizplus · Accepted Answer

In perfect price discrimination, a monopolist charges each consumer the maximum they are willing to pay, effectively capturing the entire area under the demand curve as revenue. This means the marginal revenue, which is the additional revenue from selling one more unit, is exactly equal to the price that consumers are willing to pay for that unit. Therefore, the marginal revenue curve coincides with the demand curve.

Suppose a Monopolist Practices Perfect Price Discrimination