Suppose that a price discriminating monopolist is able to divide its market into two groups. If the firm sells its product for $25 to the group whose customers have the least elastic demand, what price are they likely to charge to the group whose customers have the most elastic demand?
A. $25
B. more than $25
C. less than $25
D. The answer depends on the marginal revenue for that group.
Answer: C
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A decrease in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?
A) The price level will fall, and the level of GDP will be unaffected. B) The price level will rise, and the level of GDP will be unaffected. C) The price level will rise, and the level of GDP will fall. D) The price level will fall, and the level of GDP will fall.
Japan has a fairly high saving rate and the level of saving in Japan is above domestic investment. Use the saving and investment equation to explain what Japan is doing with this excess of saving above domestic investment
What will be an ideal response?
Which of the following is an example of a positive, as opposed to normative, statement?
a. Inflation is more harmful to the economy than unemployment is. b. If welfare payments increase, the world will be a better place. c. Prices rise when the government prints too much money. d. When public policies are evaluated, the benefits to the economy of improved equality should be considered more important than the costs of reduced efficiency.
If the Fed increases its open market purchases of government securities, it exerts a downward pressure on the interest rate. Such a phenomenon is usually referred to as the ___________________ effect
A) income B) substitution C) open market D) liquidity E) expectations