Which of the following is true about both a perfectly competitive market and a market with...

Which of the following is true about both a perfectly competitive market and a market with a monopolist who is able to achieve perfect price discrimination

		a. Deadweight loss is equal to zero.
		b. Profit is maximized where price is equal to average total cost.
		c. The marginal revenue curve is downward sloping.
		d. Average fixed cost remains constant as quantity increases.

Expert Solution

Solution: The marginal revenue curve is downward sloping.

Explanation: The perfect price discrimination, also termed as First-degree price discrimination, occurs when a different price for every unit consumed is charged by the firm. The profit is equal to the sum of consumer surplus and producer surplus.; thus there is no dead weight loss. First-degree price discrimination are sellers facing a downward-sloping curve whose unique products are enough to allow the sellers for charging the highest possible price which each unit can command.

Rahul Sunny answered 2 years ago

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