1)Which of the following statements about price discrimination is correct? 2) Wh
ID: 1190693 • Letter: 1
Question
1)Which of the following statements about price discrimination is correct?
2) Which of the following is not a reason that monopolies arise?
3) If the price of an input decreases, you would expect a monopolist to:
4) Refer to the table below. What is the monopolist’s profit-maximizing level of output?
5) Refer to the table below and suppose the monopolist produces 5 units. What is its profit?
6) Airlines usually charge a much higher price for a beer served on board than almost any other beverage retailer on the ground. Which of the following is NOT a reason for the higher price?
7) Which of the following is not a reason that monopolies arise?
A) If the demand curves are different, it is more profitable to set different prices in different markets than a single price that covers all markets.Explanation / Answer
Price discrimination is possible in following three situations -
1. Price discrimination can only be possible if there is no way a product can be transferred between markets. In other words, a seller can charge different prices in the two markets only when there is no possibility of the good being transferred from cheaper market to the dearer market otherwise not.
2. Demand curve for different market should be different. If demand curve for different markets is same then marginal revenue at every price of good would be same in different markets and it will not be profitable for seller to charge different prices in different markets.
3. Price discrimination can only lead to profitable outcome if prices are set taking into account the price elasticity of demand in respective markets that is higher price should be set in market with more inelastic demand while lower price should be set in market with less inelastic demand.
It can be seen that all three given options contain statement that are correct with respect to price discrimination.
Hence, the correct answer is option (c).
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.