How does price discrimination benefits monopolies.
Price discrimination occurs when a firm charges different prices to different group of customers for an identical good or service. The monopoly has control over pricing strategies, so it often charges different prices to different consumers for an identical good. Consumers with elastic demand pay less than the consumers with less elastic demand. Thus, By discriminating price, a monopoly maximizes it's profit by extracting consumers surplus and turning it into producers surplus or supernormal profit, and creating less amount of deadweight loss than nondiscriminating monopolists.
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