When a monopolist can perfectly price discriminate, it follows that
A)price equals marginal revenue.
B)price equals marginal cost at the quantity of output it chooses to produce.
C)the monopolist is resource-allocative efficient.
D)b and c
E)a, b, and c

Question

Quizplus · Accepted Answer

When a monopolist can perfectly price discriminate, it means they charge each consumer the maximum they are willing to pay for each unit, thus equating price to marginal revenue for every unit sold. This also means that the monopolist will produce where price equals marginal cost, achieving productive efficiency. Additionally, by equating price to marginal cost across all units, the monopolist achieves allocative efficiency, making statements B and C correct. Therefore, all statements A, B, and C are correct, making E the correct choice.

When a Monopolist Can Perfectly Price Discriminate, It Follows That