The above figure shows the market for a given product. Defining welfar

The above figure shows the market for a given product. Defining welfare as consumer surplus plus producer surplus, calculate the social welfare associated with perfect competition, single-price monopoly, and a perfect-price-discriminating monopoly.

Which market structure(s) maximize social welfare?

ANSWER

Social welfare equals
Perfect competition: A + B + C + D + E
Single-price monopoly: A + B + D
Perfect-price-discriminating monopoly: A + B + C + D + E
Social welfare is greatest under either perfect competition or perfect price discrimination.