Which of the following statements is not correct? A. For a given demand curve, the profit...
Which of the following statements is not correct?
A. For a given demand curve, the profit for a single-price monopolist is larger than for a monopolist that can price discriminate.
B. The deadweight loss that arises in monopoly stems from the fact that the profit-maximizing single-price monopoly firm produces a quantity of output that is smaller the socially-efficient quantity.
C. The deadweight loss caused by monopoly is similar to the deadweight loss caused by a tax on a product.
D. Consumer surplus is smaller with perfect price discrimination than for a single-price monopolist that can not price discriminaten with a single price monopoloblem caused by monopoly is monopoly profit.
Homework Answers
A. False. In case of price discrimination the monopolist will be making larger profit than a single price monopolist.
B. The dead weight loss in case of monopoly arises from the fact that monopolist charges a higher price and sells in inelastic region. The output is less than the output of perfect competition. The socially optimal quantity may be different from the output of perfect competition. Incorrect.
C. This statement is correct.
D. In case of perfect price discrimination the consumer surplus is zero. First statement is correct. (Consumer surplus is smaller with perfect price discrimination than for a single-price monopolist that can not price discriminate)
After this statement I am unable to get what exactly is asked. Please help me.
Second part I am unable to understand. Kindly share the correct statement through comments will resolve the issue.
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