43) 43) Demand Q3 Q Q Quantity Marginal Revenue Refer to the diagram. This firm

Question

43) 43) Demand Q3 Q Q Quantity Marginal Revenue Refer to the diagram. This firm is selling in: A) a market in which demand is elastic at all prices. B) a market in which there are an extremely large number of other firms producing the same product. C) an imperfectly competitive market. D) a purely competitive market. 44) Which of the following conditions is not required for price discrimination? 44) A) Buyers with different elasticities must be physically separate from each other B) The good or service cannot be profitably resold by original buyers C) The seller must possess some degree of monopoly power D) The seller must be able to segment the market, that is, to distinguish buyers with different clasticities of demand. 45) 45) A dilemma of regulation is that lated price that results in a "fair return" restricts output by more than would unregulated monopoly. that achieves allocative efficieney is also likely to result in B) the regulated price C) regulated pricing always D) the regulated price that achieves economie proto ficts with the "due process" provision of the allocative efficiency is also likely to result in Constitution. losses. A-9

Explanation / Answer

43. Option C.

Under imperfect competition, the firm is the price maker. It has some market power to charge a price above its marginal cost and earn economic profit.

44. Option A.

The seller needs to segment the market with buyers having different elasticities.

45. Option D.

Setting prices equal to the marginal cost, the monopolist suffers losses.

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