Question

Why will a monopolist that is able to perfectly price discriminate sell more than a non- discriminating monopolist? Use diagrams to illustrate your answers

Answer 1

When monopolist charge single price, it produce where MR equals MC and charge price on the demand curve above where MR equals MC. And when monopolist practice perfect price discrimination, it will produce where price =MC because it charges price as willingness to pay of consumer. Monopoly face downward sloping demand curve and marginal revenue curve is below the demand curve.

If we see in graph, right side graph is for single price monopolist and left side graph is for perfect price discrimination. So, we can see the perfectly price discriminate monopoly will produce higher quantity than single price monopolist.