1. Evaluate the following statement true or false :\"Price discrimination is pos
ID: 1196057 • Letter: 1
Question
1. Evaluate the following statement true or false :"Price discrimination is possible when a good is sold in a perfectly competitve market."
True, because perfectly competitive firms can distinguish between consumer types.
None of these chocies.
False, because perfectly competitive firms do not profit maxmize by setting marginal revenue equal to marginal cost
False, because perfectly competitive firms have no market power.
2. Which of the following kinds of price discrimination occurs when each custmer in a single market is charged the maximum price he or she is willing to pay?
This is not an example of price discrimination
Third-degree price discrmination
Perfect price discrimination
Second-degree price discrimination
Explanation / Answer
1. Price discrimination is possible only when there is market power, thus the given statement is false. Price discrimination allows you to sell the product at discriminated prices in different markets consisting of different buyers, this is possible only in case of monopoly. Therefore, expecting perfect competition to prevail in case of price discrimination is not possible. This rules out first three options and leaves us with option 'd' being correct.
2. Given case is a form of perfect price discrimination where the seller charges the highest price buyer is willing to pay. This is also known as first degree price discrimination as the sellers extract all the consumer surplus. Thus, option 'c' is correct.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.