A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it
a. can prevent children from buying the lower-priced tickets and selling them to adults.
b. has some degree of monopoly pricing power.
c. can easily distinguish between the two groups of customers.
d. All of the above are correct.
d
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Consider an Edgeworth Box economy with two individuals and two goods and suppose that the tastes of both individuals are quasilinear in good 1. a. Suppose initially that individual 1 has relatively little endowment of both good but the competitive equilibrium allocation has him consuming some of each. Illustrate such a competitive equilibrium. b. Now suppose the government is able to redistribute the endowment in this economy (prior to any trade occurring). In order to achieve a more equitable outcome, the government redistributes some of good 1 from individual 2 to individual 1. Show such a redistribution in your Edgeworth Box. c. Assume that both individuals continue to consume at an interior solution in the new equilibrium. How will the two individuals' consumption of good 1 change
from what it would have been without the redistribution? d. Would your answer to (c) differ in any way if the government had instead redistributed good 2 from individual 2 to individual 1? e. How would a sufficiently large redistribution alter your answer? What will be an ideal response?
Which of the following is held constant along an indifference curve?
A) the prices of the goods in question B) the total utility derived from consuming any bundle of goods on the indifference curve C) the marginal rate of substitution between the two goods in question D) the marginal utility derived from consuming any bundle of goods on the indifference curve
Which of the following is NOT an advantage associated with Eurocurrencies?
A) more convenience for users B) better yield for lenders C) tighter U.S. regulation D) cheaper lending rates
The industry elasticity of demand for gadgets is ?2, while the elasticity of demand for an individual gadget manufacturer's product is ?2. Based on the Rothschild approach to measuring market power, we conclude that:
A. there is significant monopoly power in this industry. B. the Herfindahl index for this industry is ?2. C. the Herfindahl index for this industry is 2. D. there is little monopoly power in this industry.