Suppose group price discrimination is possible; however, a firm sets the same price in each market. As a result,
A) price elasticity of demand is the same in each market.
B) the price-inelastic market will buy zero units.
C) marginal revenue in the more price-elastic market exceeds marginal revenue in the less price-elastic market.
D) the deadweight loss is less than if the firm price discriminated.
C
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Dan, age 19, may have trouble buying insurance at a low price because
A) the insurance company has private information that he is a risky driver. B) the insurance company has private information that his signals are valid. C) insurance companies fear that he has private information that his deductible is too high. D) insurance companies fear that he has private information that he is a risky driver.
Taxes create deadweight losses because they
a. reduce profits of firms. b. distort incentives. c. cause prices to rise. d. create revenue for the government.
Assume the interest parity condition holds and that initially i = i*. A reduction in the foreign interest rate (i*) will cause
A) an increase in the demand for the domestic currency. B) an increase in E. C) an expected depreciation of the domestic currency. D) all of the above
Price elasticity of demand is the responsiveness of
A. demand for a good to a change in the demand for another good. B. demand to a change in income. C. the quantity demanded to a change in price. D. demand to a change in supply.