Answer to Question #49392 in Microeconomics for susie

Question

With perfect (first-degree) price discrimination there is:
no deadweight loss
no producer surplus
one single price
an increase in consumer surplus

Answer 1

If the firm is able to practice first degree (or perfect) price discrimination. So the profit is equal to the sum of consumer surplus and producer surplus. The marginal consumer is the one whose reservation price equals to the marginal cost of the product. The seller produces more of his product than he would to achieve monopoly profits with no price discrimination, which means that there is no deadweight loss. So, with perfect (first-degree) price discrimination there is: a) no deadweight loss