What is the deadweight loss associated with the price floor


d. In perfect price discrimination, the firm is able to convert the entire area of consumer surplus that existed under perfect competition into producer surplus.


Perfect price discrimination occurs when the firm charge the maximum price that consumer is willing to pay for every unit sold.

(That price is given by the demand curve)

They will produce where the lowest price they can charge is equal to their marginal cost (marginal cost = marginal revenue), in other words where Supply curve meet Demand curve, ie. free market equilibrium (so no deadweight loss).

Their revenue will be a + b + c. That includes a, the entire consumer surplus under perfect competition.

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