If a monopolist is able to price discriminate:
A) consumer surplus is increased.
B) the welfare loss from monopoly is increased.
C) producer surplus is decreased.
D) some consumer surplus and deadweight losses are transformed into monopoly profits.

Question

Quizplus · Accepted Answer

When a monopolist is able to price discriminate, it can charge different prices to different groups of consumers based on their willingness to pay. This allows the monopolist to capture more of the consumer surplus as monopoly profit, and it also reduces the deadweight losses associated with monopoly pricing. However, the producer surplus may decrease if the monopolist has to offer lower prices to some consumers. Thus, some consumer surplus and deadweight losses are transformed into monopoly profits. So, option D is correct.

If a Monopolist Is Able to Price Discriminate