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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

When a monopolist switches from charging a single price to practicing perfect price discrimination, it reduces

a. the quantity produced.

b. the firm’s profit.

c. consumer surplus.

d. total surplus.

To determine
The causes of deadweight loss.

Explanation

Option (c):

There is a decrease in the consumer surplus, which increases the producer surplus.Thus, option ‘c’ is correct.

Option (a):

Price discrimination increases the output, as different prices are charged to different consumers allowing potential consumer to purchase goods. Thus, option ‘a’ is incorrect...

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