Question

A monopolist practicing (perfect) price discrimination has :

a. the same deadweight loss triangle as a single-price monopolist.

b. a larger deadweight loss triangle than a single-price monopolist has.

c. a deadweight loss triangle one-half the size of what it would be with uniform pricing.

d. no deadweight loss triangle.

Answer 1

Answer:

Option (d) is correct.

Explanation:

A perfect price discrimination is also known as first degree price discrimination. Under a condition of perfect price discrimination, the firms charge prices according to the willingness of the buyers. So, there will be no consumer surplus and no dead-weight loss because prices of the product are exactly equal to the its marginal cost which makes the market allocative efficient.