AP Microeconomics Practice Quiz: Price Discrimination
Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026
Test your understanding with short quizzes. This quiz has 9 questions to check your progress.
Question 1 of 9
All Questions (9)
A) To increase consumer surplus for certain buyers
B) To increase its profits by capturing consumer surplus
C) To lower its marginal cost of production
D) To create the same outcome as a perfectly competitive market
Correct Answer: B
The text states, 'A firm with market power can engage in price discrimination to increase its profits or capture additional consumer surplus under certain conditions.' This indicates that the goal is to enhance its own profit by taking surplus from consumers.
A) The firm must be experiencing economic losses.
B) The firm must have market power.
C) The firm must be able to eliminate all deadweight loss.
D) The firm must produce where price equals marginal cost.
Correct Answer: B
The text explicitly begins the discussion of price discrimination by stating, 'A firm with market power can engage in price discrimination...', identifying market power as a prerequisite.
A) It is maximized.
B) It is equal to the producer surplus.
C) It is completely converted into producer surplus.
D) It is equal to the deadweight loss.
Correct Answer: C
The text explains that with perfect price discrimination, a monopolist 'extracts all economic surplus associated with its product.' Since total economic surplus is the sum of consumer and producer surplus, and the firm captures all of it, the consumer surplus becomes zero and is added to the producer surplus.
A) The monopolist produces a greater quantity.
B) The monopolist produces a smaller quantity.
C) The monopolist produces the same quantity.
D) The relationship cannot be determined from the text.
Correct Answer: C
The text states that 'With perfect price discrimination, a monopolist produces the quantity where price equals marginal cost (just as a competitive market would).' This directly links the output level of both market structures as being the same.
A) Deadweight loss is maximized.
B) Deadweight loss is doubled.
C) Deadweight loss is unchanged.
D) Deadweight loss is eliminated.
Correct Answer: D
The provided text explicitly states that a perfectly price-discriminating monopolist 'eliminates all deadweight loss.'
A) A single-price monopoly
B) A cartel
C) A competitive market
D) An oligopoly
Correct Answer: C
The text indicates that a perfectly price-discriminating monopolist 'produces the quantity where price equals marginal cost (just as a competitive market would).' Producing where P=MC is the condition for allocative efficiency, which is achieved in a competitive market.
A) Both consumer surplus and producer surplus are eliminated.
B) Consumer surplus is eliminated and deadweight loss is created.
C) Consumer surplus and deadweight loss are both eliminated.
D) Producer surplus is eliminated and consumer surplus is maximized.
Correct Answer: C
The text states that a perfectly price-discriminating monopolist 'extracts all economic surplus' (which eliminates consumer surplus) and 'eliminates all deadweight loss.' This is a key distinction from a single-price monopolist which typically has both.
A) The demand curve and the marginal cost curve
B) The average total cost curve and the demand curve
C) The marginal revenue curve and the marginal cost curve
D) The price level and the average total cost curve
Correct Answer: A
The text states that the firm 'extracts all economic surplus.' Total economic surplus in a market is graphically represented by the area between the demand curve (marginal benefit to consumers) and the marginal cost curve (marginal cost to society) up to the equilibrium quantity. Since the firm captures all of this, it all becomes producer surplus.
A) deadweight loss
B) marginal cost
C) fixed cost
D) consumer surplus
Correct Answer: D
The text states that a firm can 'engage in price discrimination to increase its profits or capture additional consumer surplus.' This implies that the mechanism for increasing profit is the capture of consumer surplus.