Suppose We Compare Two Monopolists with Identical Cost and Demand

question 83

Multiple Choice

Suppose we compare two monopolists with identical cost and demand conditions. Monopolist A charges a single price. Monopolist B engages in price discrimination, charging a different price for different units of the product. Which one of the following statements is correct?

• A) B will generally produce more than A, resulting in less deadweight loss.
• B) A will produce less than B, resulting in smaller deadweight loss.
• C) A and B will both produce the same amount.
• D) A will produce more than B, resulting in larger deadweight loss.
• E) B will produce less than A, resulting in a larger deadweight loss.

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