Market segregation must exist in order for a monopolist to:

• A. practice price discrimination
• B. eliminate deadweight loss
• C. achieve perfect competition
• D. maximize total market output

Answer: (A)

Verified step by step guidance

1. Understand the concept of market segregation: it refers to dividing the market into distinct groups of consumers based on their willingness to pay or other characteristics, allowing the seller to charge different prices to different groups.
2. Recall that price discrimination occurs when a monopolist charges different prices to different consumers for the same product, based on their demand elasticity or willingness to pay.
3. Recognize that for a monopolist to practice price discrimination effectively, they must be able to separate the market into segments where each segment can be charged a different price without resale between segments.
4. Note that eliminating deadweight loss or achieving perfect competition are not outcomes of price discrimination; rather, price discrimination can increase the monopolist's profits by capturing more consumer surplus.
5. Conclude that market segregation is necessary for a monopolist to practice price discrimination, as it enables charging different prices to different consumer groups.