1)What three things must a firm be able to do to price-discriminate? Instruction
ID: 1209058 • Letter: 1
Question
1)What three things must a firm be able to do to price-discriminate?
Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers.
Produce where MR = MC.
2)What is the key difference between a monopolist and a perfect competitor?
A perfectly competitive firm charges a higher price than a market that is dominated by a monopolistic firm.
6)A monopolist with a straight-line demand curve finds that it can sell two units at $14 each or fourteen units at $2 each. Its marginal cost is constant at $4 per unit.
Part a not included in this question.
Instructions: Enter your answers as whole numbers.
b. A monopolist would produce _____ unit(s) and charge $____.
c. A perfect competitor would produce ________unit(s) and charge $____.
7) What are the ways in which a firm can differentiate its product from that of its competitors? What is the overriding objective of product differentiation?
8)True or false? Monopolists differ from perfect competitors because monopolists make a profit. Why?
D)True. Monopolists can earn economic profits or losses in the long run. In the long run, perfect competitors earn a normal profit. The difference between the two is the profit.
In the late 1990s, the Government Accounting Office reported that airlines block new carriers at major airports.
a. What effect does this have on fares and the number of flights at those airports?
Blocking entry (raises, lowers, does nothing) fares and (raises, lowers, does nothing) the number of flights.
b. How much are airlines willing to spend to control the use of gates to block new carriers?
Airlines are willing to spend (nothing, the cost of a new airplane, the revenue of a full airplane, the rent they gain from blocking entry)the rent they gain from blocking entrynothingthe revenue of a full airplanethe cost of a new airplane.
Produce where MR = MC.
2)What is the key difference between a monopolist and a perfect competitor?
A perfectly competitive firm charges a higher price than a market that is dominated by a monopolistic firm.
6)A monopolist with a straight-line demand curve finds that it can sell two units at $14 each or fourteen units at $2 each. Its marginal cost is constant at $4 per unit.
Part a not included in this question.
Instructions: Enter your answers as whole numbers.
b. A monopolist would produce _____ unit(s) and charge $____.
c. A perfect competitor would produce ________unit(s) and charge $____.
7) What are the ways in which a firm can differentiate its product from that of its competitors? What is the overriding objective of product differentiation?
8)True or false? Monopolists differ from perfect competitors because monopolists make a profit. Why?
D)True. Monopolists can earn economic profits or losses in the long run. In the long run, perfect competitors earn a normal profit. The difference between the two is the profit.
In the late 1990s, the Government Accounting Office reported that airlines block new carriers at major airports.
a. What effect does this have on fares and the number of flights at those airports?
Blocking entry (raises, lowers, does nothing) fares and (raises, lowers, does nothing) the number of flights.
b. How much are airlines willing to spend to control the use of gates to block new carriers?
Airlines are willing to spend (nothing, the cost of a new airplane, the revenue of a full airplane, the rent they gain from blocking entry)the rent they gain from blocking entrynothingthe revenue of a full airplanethe cost of a new airplane.
Explanation / Answer
1.
The correct options are - Identify groups with different elasticities, Limit the ability to resell the good between groups, And Separate the groups.
Price discrimination includes sale or purchase of different units of a good or service at price differentials which do not correspond directly to differences in supply cost.
2.
The correct option is (C).
In a perfect completion, the firm is a price taker, whereas in a monopolistic market, collect a price based on the average revenue (AR) curve.
A perfectly competitive firm does not take into account the effect of its output decision on the price it receives, whereas a monopolistic firm takes into account that its output decision can affect price.
6.
b. A monopolist would produce _14____ unit(s) and charge $_2___.
In monopolistic competition, a firm takes the prices charged by its rivals as given and ignores the impact of its own prices on the prices of other firms.
c. A perfect competitor would produce ________unit(s) and charge $_4___.
In a perfect competition, P = MC = MR.
7.
The correct option is (D).
Firms differentiate products by advertising. The overriding objective of product differentiation is to maintain or increase market share.
8.
The given statement is false.
Both monopolists and perfect competitors earn at least normal economic profits in the long run. They will go out of business if they do not. The distinguishing feature is that a monopolist restricts output to increase price, whereas a perfectly competitive firm cannot influence the price.
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