If a market is controlled by a perfect-price-discriminating monopoly,then
A) a deadweight loss is generated.
B) there is no consumer surplus.
C) consumer surplus is the same as under perfect competition.
D) output is less than that of a single-price monopoly.

Question

Quizplus · Accepted Answer

Perfect price discrimination means that the monopoly can charge each consumer their individual maximum willingness to pay, which eliminates all consumer surplus. This also means that there is no deadweight loss as the monopoly is producing at the efficient point. However, output will be less than that of perfect competition, as the monopoly is not producing at the point where marginal cost equals demand.

If a Market Is Controlled by a Perfect-Price-Discriminating Monopoly,then