There are seven consumers, each of whom is hungry for exactly one Butterfinger.

ID: 1256445 • Letter: T

Question

There are seven consumers, each of whom is hungry for exactly one Butterfinger. The consumers' maximum willingness to pay is given in the table below:

Assume that the seller is unable to perfectly price discriminate, and instead decides to segment her customers into two groups, each of which will be charged a different price. Which statement below is NOT true?

When a firm practices third-degree price discrimination, profits are higher than they would be if it had to charge one single price to every customer. When a firm practices third-degree price discrimination, consumer surplus and deadweight loss are greater than if it charged one price, and profit is higher. When a firm practices third-degree price discrimination, profits are lower than they would be if it could practice first-degree price discrimination. When a firm practices third-degree price discrimination, consumer surplus and deadweight loss are greater than if it practiced first-degree price discrimination.

Explanation / Answer

Ans: When a firm practices third-degree price discrimination, profits are lower than they would be if it could practice first-degree price discrimination.

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There are seven company locations each containing one building including the cor

There are seven consumers, each of whom is hungry for exactly one Butterfinger.

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There are seven consumers, each of whom is hungry for exactly one Butterfinger.

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