Perfect price discrimination occurs when each consumer is charged his or her maximum price for the product.
Question:
"Perfect price discrimination" occurs when each consumer is charged his or her maximum price for the product. When this happens, the monopolist is able to capture the entire consumer surplus. Draw a demand curve for each of six consumers and compare (a) the situation in which all consumers face a single price with (b) a market under perfect price discrimination. Explain the paradoxical result that perfect price discrimination removes the inefficiency of monopoly.
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With six different demand curves and a single market price some co...View the full answer
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