When a Market Model Moves from That of a Monopoly

question 128

Multiple Choice

When a market model moves from that of a monopoly to one in which perfect price discrimination is practiced,the deadweight loss

• A) increases.
• B) remains unchanged.
• C) can increase or decrease depending on the type of loss.
• D) decreases.
• E) fluctuates.

---

Definitions:

Implicit Costs

The opportunity costs of using resources owned by the firm for its own operations, without direct payment but with foregone opportunities.

Explicit Costs

Direct, out-of-pocket payments for wages, rent, and materials, among others, involved in the production of goods or services.

Opportunity Costs

The cost of forgoing the next best alternative when making a decision or choice.

Implicit Costs

Indirect, non-out-of-pocket expenses which represent the opportunity costs of using resources owned by the firm for its operations.