Briefly and concisely define the following terms:
a.
Price discrimination
b.
Tying contracts
c.
Concentration ratio
d.
Market power
What will be an ideal response?
| a. | Price discriminationoccurs when different prices, relative to costs, are charged to different buyers of the same product. |
| b. | Tying contractsare arrangements under which a customer who wants to buy some product from a given seller is required as part of the price to agree to buy some other product or products exclusively from that same seller. |
| c. | A concentration ratio is the percentage of an industry’s output produced by its four (or some other small number) largest firms. |
| d. | Market poweris the ability of a firm to raise its price significantly above the competitive price level and to maintain this high price profitably for a considerable period. |
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