A Firm with a Demand Curve P = 10 -

Multiple Choice

A firm with a demand curve P = 10 - Q is a perfect price discriminating monopolist with zero marginal costs and fixed costs of 12. Consider the following two statements comparing the price discriminating case with a single price monopolist. 1) In this case consumers are better off as a group because more of the product is produced. 2) Producers are better off because they have higher profits. Which of the following comments about these statements is true?

A) Both statements are true.
B) Only the first statement is true.
C) Only the second statement is true.
D) Both statements are false.