GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Maximise the sales / profit
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Share the consumer’s surplus
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Reduce the welfare of masses
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Increase the welfare of masses
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Detailed explanation-1: -Answer and Explanation: The answer is A. A perfectly price-discriminating monopolist captures all of what was consumer surplus as a monopoly profit as compared to a single-price monopolist.
Detailed explanation-2: -If firms can identify their different consumer types and their willingness to pay, then they can charge the different prices for the same commodity according to it, this depicts price discrimination. Option A is incorrect because competitive firms sell homogenous goods and cannot charge a different price for them.
Detailed explanation-3: -First, the company needs to have sufficient market power. Second, it has to identify differences in demand based on different conditions or customer segments. Third, the firm must have the ability to protect its product from being resold by one consumer group to another.