What are the conditions for price discrimination?
The firm must possess some ability to control market price (the firm must possess some monopoly power), the ability to segment customers based on their elasticity of demand, and the product cannot be easily resold.
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Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process: Name of CompanyRevenuesCost of Purchased inputsCitrus Growers Inc.$0.750Florida Jam Company$2.00$.75The Corner Store$2.50$2.00What is the value added of The Corner Store?
A. $2.50 B. $2.00 C. $1.75 D. $0.50
Investment is the expenditure done by
A) savers. B) firms. C) the rest of the world. D) governments. E) Both answers A and B are correct.
Using the money demand and money supply model, an increase in money demand would cause the equilibrium interest rate to
A) increase. B) decrease. C) not change. D) increase, then decrease.
Excess capacity in monopolistically competitive industries results because in equilibrium
A) each firm's output level is too great to minimize average cost. B) each firm's output level is too small to minimize average cost. C) firms make positive economic profit. D) price equals marginal cost.