Discuss the practical difficulties associated with practicing perfect price discrimination
What will be an ideal response?
Perfect price discrimination is difficult to practice because it requires that the firm know exactly the maximum willingness to pay of each individual buyer. Firms are generally unable to get this information or acquiring it may be quite costly.
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A determinant of the price elasticity of supply that is also a determinant of the price elasticity of demand is:
A. availability of inputs. B. flexibility of the production process. C. adjustment time. D. whether the good is a luxury or a necessity.
If the price elasticity of demand for a good is 2, then a 10 percent decrease in the quantity demanded must be the result of
a. a 0.2 percent increase in the price. b. a 2.5 percent increase in the price. c. a 5 percent increase in the price. d. a 20 percent increase in the price.
A 2009 article in The Economist noted that
a. recent research has allowed economists to estimate the values of fiscal multipliers with a great deal of precision. b. research on multipliers indicates that multipliers for permanent tax cuts tend to be smaller than multipliers for temporary tax cuts. c. most of the evidence on multipliers for government spending is based on changes in military expenditures. d. All of the above are correct.
An advocate of supply-side fiscal policy would advocate which of the following?
A. imposition of new taxes on technological advances B. more regulation C. increase in resource prices D. reduction in taxes