Why is it important that a firm have different groups of consumers with different demand elasticities if it wishes to engage in price discrimination?
What will be an ideal response?
Price discrimination works because a firm charges higher prices to individuals with a relatively more inelastic demand and lower prices to those with a relatively more elastic demand. If all consumers have the same elasticity of demand then charging different prices to different groups of consumers will not yield a higher profit to the firm.
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When deriving an Engel curve, if the optimum point for good X lies to the left as income increases, good X is
a. a normal good. b. an inferior good. c. a Giffen good. d. a substitute for good Y.
TANF stands for _____
a. Temporary Aid to Needy Families b. Temporary Assistance to Needy Families c. Transitory Aid to Needy Families d. Transitory Assistance to Needy Families
A mixed economic system is best described as an economy with a mix of
A) state and federal governments. B) domestic and foreign firms. C) free markets and government control. D) for-profit organizations and not-for-profit organizations.
Which of the following would NOT be a short-run decision for the firm?
A) Recall workers who were previously laid-off. B) Have labor work two hours overtime each day in order to expand output C) Build another wing on the plant in order to add a new assembly line. D) Place an order with a supplier for additional raw materials.