{"id":199949,"date":"2025-03-13T05:22:49","date_gmt":"2025-03-13T05:22:49","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=199949"},"modified":"2025-03-13T05:22:52","modified_gmt":"2025-03-13T05:22:52","slug":"compared-to-a-monopolist-that-does-not-price-discriminate","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/03\/13\/compared-to-a-monopolist-that-does-not-price-discriminate\/","title":{"rendered":"Compared to a monopolist that does not price discriminate"},"content":{"rendered":"\n<p>Compared to a monopolist that does not price discriminate, a price discriminator will produce an output that is capture consumer surplus, and generate deadweight loss in the market.<\/p>\n\n\n\n<p>a) smaller; less; more<br>b) larger; more; more<br>c) larger; more; less<br>d) smaller; more; less<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\"><strong>The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n<p>The correct answer is <strong>c) larger; more; less<\/strong>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Explanation:<\/h3>\n\n\n\n<p>When comparing a monopolist who does not price discriminate to one who does, it is essential to understand how price discrimination affects output, consumer surplus, and deadweight loss.<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Output (larger):<\/strong><\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A monopolist who engages in price discrimination will often produce more output than a monopolist who does not price discriminate. This is because price discrimination allows the monopolist to sell at different prices to different consumers based on their willingness to pay.<\/li>\n\n\n\n<li>By charging higher prices to consumers with a higher willingness to pay and lower prices to those with a lower willingness to pay, the monopolist can expand production to the point where the marginal cost of production equals the marginal revenue from each individual price group.<\/li>\n\n\n\n<li>In contrast, a monopolist who does not price discriminate faces a single price for all consumers and maximizes profits by restricting output. This results in a lower quantity of goods produced and sold.<\/li>\n<\/ul>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Consumer Surplus (more):<\/strong><\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A price-discriminating monopolist captures more consumer surplus compared to a non-price-discriminating monopolist. Consumer surplus is the difference between what consumers are willing to pay and what they actually pay.<\/li>\n\n\n\n<li>With price discrimination, the monopolist extracts more of the consumer surplus by charging different prices based on individual willingness to pay. Essentially, the monopolist can &#8220;capture&#8221; what would have been consumer surplus as additional profits, leading to a reduction in consumer surplus overall but a larger share of it being captured by the monopolist.<\/li>\n<\/ul>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Deadweight Loss (less):<\/strong><\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Deadweight loss occurs when the market is not operating at an efficient level\u2014typically because of restricted output and prices above the marginal cost.<\/li>\n\n\n\n<li>Price discrimination can reduce deadweight loss because the monopolist is able to serve more consumers at different price points. This brings the market closer to a competitive level of output, where goods are sold to all consumers whose willingness to pay is above the marginal cost of production.<\/li>\n\n\n\n<li>In contrast, a non-price-discriminating monopolist produces less output and charges a higher price, leading to higher deadweight loss as fewer consumers are served, and some of the potential gains from trade are lost.<\/li>\n<\/ul>\n\n\n\n<p>Thus, compared to a monopolist who does not price discriminate, a price-discriminating monopolist typically produces <strong>larger output<\/strong>, captures <strong>more consumer surplus<\/strong>, and creates <strong>less deadweight loss<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Compared to a monopolist that does not price discriminate, a price discriminator will produce an output that is capture consumer surplus, and generate deadweight loss in the market. a) smaller; less; moreb) larger; more; morec) larger; more; lessd) smaller; more; less The correct answer and explanation is : The correct answer is c) larger; more; [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-199949","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/199949","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=199949"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/199949\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=199949"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=199949"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=199949"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}