Final answer:
Price discrimination can occur in both perfectly competitive and monopoly markets. Perfect price discrimination allows for maximum profits but eliminates consumer surplus. Therefore correct option is B
Step-by-step explanation:
Price discrimination refers to the practice of charging different prices to different customers for the same product or service. It is not illegal in the United States and Europe, but there are certain restrictions in place to prevent unfair or discriminatory practices. Price discrimination can occur in both perfectly competitive and monopoly markets. In a perfectly competitive market, price discrimination may not be as common due to the presence of multiple sellers offering similar products. However, in a monopoly market, the seller has more control and can potentially engage in price discrimination to maximize profits.
Perfect price discrimination is a scenario in which the seller is able to charge each buyer the maximum price they are willing to pay. This allows for maximum possible profits for the seller, but also eliminates consumer surplus since every buyer is paying exactly what they think the product is worth. In this scenario, the monopolist would produce more output compared to a perfectly competitive industry, but there would be no consumer surplus.