If the monopoly firm perfectly price discrimates then the co

If the monopoly firm perfectly price discrimates, then the consumer surplus amounts to

Solution

Perfect price discrimination is said to occur when the monopolist is able to sell each seperate unit of output at a different price.

In other words, under perfect price discrimination, each buyer is forced to pay the price which is equal to the maximum amount he would be willing to pay rather than do without the good altogether.

Consumer surplus is difference between the maximum willingness to pay and price charged. Since, buyer is paying an amount equal to his maximum willingness to pay, he gets no consumer surplus or zero consumer surplus.

Thus, if the monopoly firm perfectly price discriminates, then the consumer surplus amounts to zero.