If a monopolist is able to perfectly price discriminate, which of the following outcomes will occur?

• A. All consumers will pay the same price for the good.
• B. The monopolist will capture all consumer surplus as profit.
• C. There will be deadweight loss in the market.
• D. The monopolist will produce less than the socially efficient quantity.

Answer: (B)

Verified step by step guidance

1. Understand the concept of perfect price discrimination: it means the monopolist charges each consumer their maximum willingness to pay, capturing all consumer surplus.
2. Recall that under perfect price discrimination, the monopolist sells to every consumer whose willingness to pay is at least the marginal cost, so the quantity produced is socially efficient.
3. Recognize that because the monopolist charges each consumer differently, there is no single market price, so not all consumers pay the same price.
4. Note that perfect price discrimination eliminates deadweight loss because the monopolist produces the efficient quantity where price equals marginal cost.
5. Conclude that the monopolist captures all consumer surplus as profit, producing the socially efficient quantity without deadweight loss.