question archive Which of the following occurs with both perfectly price discriminating and single-price monopolies? A
Which of the following occurs with both perfectly price discriminating and single-price monopolies? A
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Which of the following occurs with both perfectly price discriminating and single-price monopolies?
A. The level of output is inefficient.
B. Deadweight loss is created.
C. There is a redistribution of consumer surplus to the monopoly.
D. All consumer surplus goes to the monopoly.
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Answer: C
In both types of monopolies, consumer surplus is transferred to the monopoly but the difference is how much is transferred and if deadweight loss is created. A single-price monopoly transfers only a portion of consumer surplus to itself but a perfectly price discriminating monopolist transfers the entire consumer surplus. This is how they earn a positive economic profit.
