Suppose there are two groups of consumers that a monopolist can identify, one with relatively price-inelastic demand (perhaps because they have higher income and thus are not price sensitive) and one with relatively price-elastic demand. Which of the following forms of price discrimination would increase profit relative to charging each group the same price?
a. Charging the group with the higher price elasticity a higher price, and charging the group with the lower price elasticity a lower price.
b. Charging the group with the higher price elasticity a lower price, and charging the group with the lower price elasticity a higher price.
c. Charging the group with the higher price elasticity a price equal to marginal cost, and charging the group with the lower price elasticity a higher price.
d. Charging a uniform price to both the groups of consumers.
b
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A monetary system is preferable over the barter system because of the problems associated with
A) the law of diminishing marginal utility. B) the law of increasing relative costs. C) the double coincidence of wants. D) cash leakages.
If a "certificate of convenience and public necessity" protects a monopolist's position, the barrier to entry this firm relies on is called
A) a tariff. B) a government license. C) a patent. D) economies of scale.
When the free rider problem is present in a market the good:
A. is not excludable. B. is rival in consumption. C. will be underconsumed. D. will be oversupplied.
Answer the following statement(s) true (T) or false (F)
1. Falling real GDP per capita can bring on unemployment, bankruptcies, and many other human hardships. 2. With nonmarket transactions, no money is exchanged. 3. The underground economy is excluded from the GDP because it goes unreported to the government. 4. If people start taking more three-day weekends, GDP and people’ s economic well- being will necessarily drop. 5. The GDP often reflects important changes in the improvements in the quality of goods.