How does price discrimination relate to consumer surplus?

1 Answer
Nallasivam V
Aug 16, 2015

In a first degree price discrimination there will be no consumer surplus at all.

Explanation:

When the monopolist practice 1st degree price discrimination, he will charge that price which a consumer would like to pay for his good. Since the price charged from each consumer is equal to the price the consumer is willing to pay, the consumer surplus will vanish.

You must understand -

Consumer surplus = price the consumer is willing to pay - Actual price.

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