Question

Why is the welfare generated by a single-price monopolist less than the welfare generated by a monopolist that practices 1st-degree price discrimination?

Answer 1

Because single price monopolist produces where price is greater than MC. And first degree price discrimination monopolist produce where price =MC.

Monopolist faces downward sloping demand curve and marginal revenue curve is below the demand curve. Firm maximises it's profit where MR equals MC and charge price on the demand curve above where MR equals MC. So it creates deadweight loss.. But when monopolist price discriminates, it charge different prices from different consumers according to their willingness to pay and so it produce where price equals MC and deadweight loss becomes zero. So welfare is higher in first degree price discrimination than single price monopoly.