"Price discrimination allows a monopolist to increase his or her economic profits by capturing part of the consumer surplus and turning it into economic profit
" Is the previous statement correct or incorrect? If the statement is correct, why is it important in understanding firms' behaviors? If it is incorrect, why is it incorrect?
The statement is correct. The statement is important because it explains why firms want to price discriminate, namely because they can convert some of the consumer surplus into extra economic profit. Hence firms endeavor to price discriminate because if they can do so, they can increase their economic profit.
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As wealth increases in the economy, we would expect to observe
A) bond prices and interest rates both rise. B) bond prices and interest rates both fall. C) bond prices rise and interest rates fall. D) bond prices fall and interest rates rise.
Filling gaps in your information by generalizing based on observable characteristics is called:
A. statistical discrimination. B. signaling. C. building a reputation. D. proofing.
Suppose that only two goods are produced in an economy. If a country possesses the comparative advantage in the production of one good then it:
A. must also possess the comparative advantage in the production of the other good. B. must also possess the absolute advantage in the production of that good. C. cannot also possess the comparative advantage in the production of the other good. D. cannot also possess the absolute advantage in the production of that good.
Other things the same, as the price level rises,
a. the dollar depreciates. b. the interest rate falls. c. people feel less wealthy. d. All of the above are correct.