Charging a different price to each consumer results in an interesting situation.A firm is able to achieve the efficiency of a(n)________ while also producing the output that a(n)________ would choose.
A) monopolist; government
B) monopolist; society
C) firm; consumer
D) elastic consumer; inelastic consumer
E) competitive market; monopolist

Question

Quizplus · Accepted Answer

Charging different prices to each consumer is a characteristic of price discrimination, which is a strategy used by monopolists to maximize profits. However, by adopting this strategy, the firm is able to mimic the outcome of a competitive market (i.e., achieving the efficiency of a competitive market). Hence, the firm is able to achieve the efficiency of a competitive market while also producing the output that a monopolist would choose.

Charging a Different Price to Each Consumer Results in an Interesting