1. True or false? Explain your answer.
A single-price monopolist sells to some customers that a price-discriminating monopolist refuses to sell to.
A price-discriminating monopolist will sell to some customers that a single-price monopolist will refuse to—namely, customers with a high price elasticity of demand who are willing to pay only a relatively low price for the good.
A price-discriminating monopolist creates more inefficiency than a single-price monopolist because it captures more of the consumer surplus.
Although a price-discriminating monopolist does indeed capture more of the consumer surplus, inefficiency is lower: more mutually beneficial transactions occur because the monopolist makes more sales to customers with a low willingness to pay for the good.
Under price discrimination, a customer with highly elastic demand will pay a lower price than a customer with inelastic demand.
Under price discrimination consumers are charged prices that depend on their price elasticity of demand. A consumer with highly elastic demand will pay a lower price than a consumer with inelastic demand.