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Question from Past Microeconomics Qualifying ExamEdit

Spring 2005 - Section I, Question three, George Mason University

T,F,U. State first whether the following statements are true, false or uncertain. Then briefly explain your resaoning in four or five sentences. You may sue a graph if it helps clairify your answer.

Perfect price discrimination leads to efficient outcomes. There are transfers but there are no efficiency losses.

AnswerEdit

True. Assuming that the product is continuous, perfect price discrimination will lead to the same outcome as perfect competition. All consumer surplus is transfered to the producer in the form of producer surplus (profit).

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