Electric utilities often practice second-degree price discrimination. Why might this improve consumer welfare? Second-degree price discrimination...

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Electric utilities often practice second-degree price discrimination. Why might this improve consumer welfare? Second-degree price discrimination...

Electric utilities often practice second-degree price discrimination. Why might this improve consumer welfare?

Second-degree price discrimination might improve consumer welfare because, compared with single-monopoly pricing,

A.profit is higher.

B.output is higher.

C.producer surplus is lower.

D.prices are lower.

E.variety is greater.

business economics

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Answer 1

Answer #1

Second degree price discrimination means charging different prices for different quantities. Single monopoly may not offer quantity discounts hence may charge higher prices. Second degree price discrimination can offer lower prices.

Hence prices are lower here. Option D is correct.

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Answer 2

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