Question

With perfect price discrimination the monopoly a. eliminates all price discrimination by charging each customer the same price. b. charges each customer an amount equal to the monopolist's marginal cost of production. c. eliminates deadweight loss. d. eliminates profits and increases consumer surplus.

Answer 1

The correct answer to the following question will be Option C (eliminates deadweight loss).

Step-by-step explanation:

• Corresponds to market discrimination where a certain monopolist pays the highest price to be paid by each consumer. The monopoly removes deadweight using total price competition or distribution.
• It is often referred to as ideal price discrimination because it entails full market manipulation. Potential customers do not reap any market surplus on all this.

The another 3 choices have no relation with the specified situation. Therefore the correct answer seems to be choice C.