Compare and Contrast the Effect of Perfect Competition to the Effect

question 116

Essay

Compare and contrast the effect of perfect competition to the effect of perfect price discrimination on:
a) efficiency.
b) consumer surplus.
c) economic profit in the long run.

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Definitions:

Issued Shares

The total number of shares that have been allocated to shareholders, including both public investors and company officers.

Outstanding Shares

Refers to the total number of shares of a corporation that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Paid-in Capital

The amount of money that a company has received from investors during common or preferred stock issuance, which is recorded in the equity section of the balance sheet.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, reducing the amount of outstanding stock.