What arguments have been advanced in defense of price discrimination?
What will be an ideal response?
Some would support price discrimination on the basis of fairness or justice. For example, lower prices might be favored for the elderly or the needy. In some cases, the price discrimination allows a firm to stay in business and provide desirable products to consumers. This may be done by attracting additional consumers with the discriminatory prices, thus, generating sufficient revenue to cover costs. In some of these cases, the discriminatory pricing may allow the firm’s output to expand so that it reaps economies of scale, thus potentially driving the price down for all consumers.
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Suppose the Fed buys $1 billion worth of bonds and the required reserve ratio is 5%. In theoretical limit, the money supply could
A) decrease by $5 billion. B) increase by $5 billion. C) increase by $20 billion. D) decrease by $20 billion.
Which term is synonymous with a perfectly competitive firm?
a. Price taker b. Oligopoly c. Private enterprise d. Monopoly
Is the claim that environmental standards reduce industrial competitiveness valid?
A) Yes, because environmental standards raise costs to businesses. B) No, because consumers will want to buy from firms that pollute less. C) No, because environmental standards have little effect in high-income countries. D) Yes, because environmental standards will cause the imposition of WTO sanctions.
The effect of a recession on a company like General Motors Corporation is such that
A) sales decline more sharply for General Motors as compared to firms that do not produce durable goods. B) profits fall less sharply as compared to firms that do not produce durable goods. C) the decline in sales is more short-lived as compared to firms that do not produce durable goods. D) there is no difference in the impact of the recession on its profits as compared to firms that do not produce durable goods.