A perfect price discriminator A) charges each buyer her reservation price. B) charges different prices to each customer based upon different costs of delivery. C) generates a deadweight loss to society. D) charges lower prices to customers who buy greater quantities. ANSWER A
Date: September 9th, 2020
Price discrimination is welfare reducing. A) False, price discrimination can increase the coverage of a market thereby increasing welfare. B) False, price discrimination limits the coverage of a market thereby increasing welfare. C) True, price discrimination limits the coverage of a market thereby increasing welfare. D) True, price discrimination can increase the coverage of a […]
Date: September 9th, 2020
If a firm faces a flat demand curve, A) it cannot engage in price discrimination. B) it can only engage in two-part tariffs. C) it can only engage in perfect price discrimination. D) None of the above. ANSWER A
Date: September 9th, 2020
Firms price discriminate to maximize total revenue. Indicate whether the statement is true or false ANSWER False. Firms price discriminate to increases profit.
Date: September 9th, 2020
A perfect-price-discriminating equilibrium maximizes A) consumer surplus. B) the associated deadweight loss. C) the market inefficiency. D) total welfare. ANSWER D
Date: September 9th, 2020
Historically, price discrimination was considered illegal in all instances. More recently, antitrust authorities have discovered that A) price discrimination can increase the coverage of a market thereby increasing welfare. B) price discrimination limits the coverage of a market thereby increasing welfare. C) price discrimination limits the coverage of a market thereby decreasing welfare. D) price […]
Date: September 9th, 2020
A perfect-price-discriminating monopoly’s marginal revenue curve A) lies below the demand curve. B) is the demand curve. C) varies for each consumer. D) is the same as the monopolist’s marginal revenue curve. ANSWER B
Date: September 9th, 2020
Explain why a firm can earn more profit by price discrimination than from setting a uniform price. What will be an ideal response? ANSWER First, price discrimination allows a firm to charge a higher price to customers who are willing to pay more than the uniform price. The firm captures more of the consumer […]
Date: September 9th, 2020
Which of the following is an example of group price discrimination? A) Senior citizen discounts. B) Buy two, get one free. C) Buy one, get another half off. D) None of the above. ANSWER A
Date: September 9th, 2020
Suppose a firm uses the following price strategy for every customer. The first two units purchased cost $4 each, and any extra unit costs $3.50. What kind of price discrimination is this? A) First-degree price discrimination B) Group price discrimination. C) Non-uniform pricing. D) Uniform pricing. ANSWER C
Date: September 9th, 2020
