A perfect-price-discriminating monopoly maximizes social welfare as measured by the sum of producer surplus plus consumer surplus
What will be an ideal response?
True. Unlike the competitive market, however, social welfare is all producer surplus. There is no consumer surplus. Thus, while a perfect-price-discriminating monopoly is efficient, many are troubled by it based upon distributional issues.
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What is the difference between an endogenous variable and an exogenous variable?
What will be an ideal response?
What is an economic variable?
What will be an ideal response?
To reduce adverse selection
A) firms can use screening. B) both consumers and firms can use screening. C) the government could eliminate all monopolies and oligopolies. D) Both B and C.
The market for used cars is shown in the above figure. Neither buyers nor sellers can tell whether any given car is a lemon. Ten percent (10%) of all cars are lemons. Which of the following statements is TRUE?
A) All of the cars will be sold at $1,900. B) No cars will be sold. C) Only lemons will be sold at $1,600. D) Only lemons will be sold at $1,000.