Asked by Melissa Shular on Jun 24, 2024
Verified
When a monopolist practices price discrimination,compared with a single-price monopolist,deadweight loss will:
A) remain the same.
B) increase.
C) decrease.
D) increase initially and then return to its original level.
Price Discrimination
The strategy of selling the same product to different customers at different prices, based on their willingness to pay.
Deadweight Loss
Deadweight Loss is the loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved, often due to market distortions like taxes or subsidies.
Single-Price Monopolist
A monopolist that charges all consumers the same price for its product or service.
- Assess the impact of price differentiation on societal well-being, considering alterations in consumer surplus, producer surplus, and deadweight loss.
Verified Answer
BH
Bilal HussainJun 27, 2024
Final Answer :
C
Explanation :
When a monopolist practices price discrimination, deadweight loss decreases compared to a single-price monopolist due to the fact that some consumers are charged a lower price and are therefore able to consume more, which reduces the overall inefficiency of the market.
Learning Objectives
- Assess the impact of price differentiation on societal well-being, considering alterations in consumer surplus, producer surplus, and deadweight loss.