Practice question · Multiple choice
A perfectly price-discriminating monopolist produces the competitive quantity yet the outcome is not the competitive one. What is the difference between them?
Hints
- Ask what each buyer pays when the firm knows every willingness to pay.
- Separate the size of the pie from who eats it.
Show the answer
C. The distribution: the firm captures the whole surplus
Why
Efficiency and equity come apart here. The firm sells to everyone willing to pay above marginal cost, so no gains are lost, but each buyer pays exactly their maximum and keeps nothing.
Practise Monopoly
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