Question

Given below are two statements:
Statement I: In the extreme case of perfect price discrimination the dead weight loss of monopoly is completely eliminated and all the surplus in the market goes to the monopolist.
Statement II: Imperfect price discrimination necessarily increases welfare compared to the outcome of a single monopoly price.
In the light of the above statements, choose the most appropriate from the options given below:

• A. Both Statement I and Statement II are correct
• B. Both Statement I and Statement II are incorrect
• C. Statement I is correct but Statement II is incorrect
• D. Statement I is incorrect but Statement II is correct

Answer 1

The Correct Option is C

The correct option is(C): Statement I is correct but Statement II is incorrect