Asked by Alejandro Bernal on Jul 07, 2024
Verified
When a monopolist engages in perfect price discrimination,
A) the marginal revenue curve lies below the demand curve.
B) the demand curve and the marginal revenue curve are identical.
C) marginal cost becomes zero.
D) the marginal revenue curve becomes horizontal.
Perfect Price Discrimination
Perfect price discrimination occurs when a seller charges every consumer the maximum they are willing to pay, capturing the entire consumer surplus as profit.
Marginal Revenue
The additional revenue that a company gains by selling one more unit of a product or service.
Demand Curve
A graph showing the relationship between the price of a good and the quantity demanded, typically downward sloping.
- Evaluate the impact of absolute price discrimination on societal welfare.
Verified Answer
Learning Objectives
- Evaluate the impact of absolute price discrimination on societal welfare.
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