Question

Suppose a monopolist discovers a way to perfectly price-discriminate. What is consumer surplus under this scenario? What are the efficiency costs?

Solution

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Answered 1 year ago
Answered 1 year ago

The consumer surplus would be zero since the monopolist will charge at the highest maximum price that the consumer is willing to pay. The deadweight loss will also be zero since the monopolist will charge at points where price is equal to marginal cost.

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