Asked by Latanya Haynes on Jun 22, 2024
Verified
A monopolist that can practice perfect price discrimination will not impose a deadweight loss on society.
Price Discrimination
A pricing strategy where different prices are charged to different consumers for the same product or service, often based on their willingness to pay.
Deadweight Loss
The loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved or is unattainable.
- Determine the circumstances that enable a monopolist to implement perfect price discrimination and analyze its impact on efficiency.
Verified Answer
JA
Jessica AvilaJun 23, 2024
Final Answer :
True
Explanation :
A monopolist that can practice perfect price discrimination charges each consumer their maximum willingness to pay, thus selling to every consumer who values the product above the cost of production. This results in no deadweight loss because the quantity produced and sold matches the socially efficient level, where price equals marginal cost for every unit sold.
Learning Objectives
- Determine the circumstances that enable a monopolist to implement perfect price discrimination and analyze its impact on efficiency.