What are the consequences of price discrimination for the producer, the consumer, and for society?
What will be an ideal response?
Price discrimination can yield additional profit for the pure monopolists. By segmenting the market, the pure monopolist can charge a higher price to those who are willing to pay more for a product. Total revenue and profits are increased as a consequence. A discriminating monopolist will also produce more output than a nondiscrimination monopolist. When a discriminating monopolist lowers the price, the reduced price is only for the additional units sold and not for prior units sold. Total revenue can increase as output increases beyond what would be the case if there were no price discrimination and thus the firm will find it more profitable to increase output. From society’s perspective, this increased output makes the pure monopolist less evocatively inefficient than would be the case if there were no price discrimination.
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A) supply shocks B) monetary accommodation C) exchange rate appreciation D) frequent wage indexation
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A. PPO. B. fee-for-service provider. C. HMO. D. mini-med.
Answer the following statement true (T) or false (F)
1) An increase in demand accompanied by an increase in supply will increase the equilibrium quantity, but the effect on equilibrium price will be indeterminate. 2) A government subsidy per unit of output increases supply. 3) Consumers buy more of normal goods as their incomes rise. 4) Toothpaste and toothbrushes are substitute goods.