The following figure depicts a generalized downward-sloping market demand (D)curve for a product.It also shows the firm's relevant marginal revenue (MR)curve and marginal cost (MC)curve.Refer to this figure to answer the following questions:

-If the firm can perfectly price discriminate,which of the following areas would be designated as deadweight loss?
A) A
B) B
C) C
D) A + B
E) There is no deadweight loss.

Question

The following figure depicts a generalized downward-sloping market demand (D)curve for a product.It also shows the firm's relevant marginal revenue (MR)curve and marginal cost (MC)curve.Refer to this figure to answer the following questions:
 
-If the firm can perfectly price discriminate,which of the following areas would be designated as deadweight loss?
A) A 
B) B 
C) C 
D) A + B 
E) There is no deadweight loss.

Quizplus · Accepted Answer

If the firm can perfectly price discriminate, it can capture the entire consumer surplus by charging each customer their willingness to pay. As a result, there will be no deadweight loss in any area because all units of the product will be sold at above the marginal cost, and the total surplus will be maximized.

The Following Figure Depicts a Generalized Downward-Sloping Market Demand (D)curve