Price discrimination is more likely in the case of services than in the case of goods because
A) producers of goods usually do not face downward sloping demand curves.
B) it is easier to distinguish customers with different elasticities of demand with respect to services than with goods.
C) elasticities of demand vary more with services than with goods.
D) it is more difficult to resell services.
Answer: D
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Refer to Table 14-4. If Alistair assumes that Baine would increase its advertising budget, what should it do?
A) Alistair should not change its advertising budget. B) Alistair should keep its own budget the same and allow Baine to incur the higher cost. C) Being a duopolist, Alistair is not affected by Baine's choices because it has a secure 50 percent market share. D) Alistair should also increase its advertising budget.
Carefully explain the difference between diseconomies of scale and diminishing returns
What will be an ideal response?
Which of the following is a short-run adjustment?
a. Toyota builds an automobile plant in Kentucky. b. Faced with increasing enrollment, a private college builds a new School of Business building. c. Because of staggering losses, three insurance companies exit the industry. d. People's Bank hires two new tellers to meet increased demand for customer services. e. Shaveco enters the razor blade market with a new product, produced in the United States.
In some industries, like insurance, both small and very large firms coexist and compete quite effectively in the market. This indicates that the long-run average total cost curve in these industries
a. is "U" shaped. b. is downward sloping over all levels of output. c. exhibits constant returns to scale over a wide range of output. d. exhibits diseconomies of scale beginning at a low rate of output.