Which of the following is an example of price discrimination?
A) Increasing the price of a product when demand for the product increases.
B) Charging different prices for a product in different regions of the country due to differences in transportation costs.
C) Bundling complementary products to attract additional sales.
D) Reducing the price of a product to reduce excess inventory.
C
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Adverse selection refers to the
A) use of statistical discrimination in making loans. B) possession of information by one party in a financial transaction not known by the other party. C) likelihood that a potential borrower may use the funds that he receives for unworthy, high risk projects. D) possibility that the borrower may engage in riskier behavior after the loan is obtained.
In the figure above, if there is no Ricardo-Barro effect, the government has a budget ________ because the ________
A) surplus of 0.2 trillion; SLF curve lies to the right of the PSLF curve. B) deficit of 0.2 trillion; SLF curve lies to the right of the PSLF curve. C) deficit of 0.4 trillion; SLF curve shows a smaller quantity of LF than the PSLF curve. D) surplus of 0.4 trillion; SLF curve shows a larger quantity of LF than the PSLF curve. E) surplus of -0.2 trillion; SLF curve lies to the right of the PSLF curve.
As long as the firm illustrated above remains open, it will set a price of ________ per month and it will ________
A) $50; earn an economic profit B) $50; incur an economic loss C) $40; earn an economic profit D) $40; incur an economic loss E) less than $20; incur an economic loss
80% of the total number of people in Genovia with health insurance are above 40 years of age. Which of the following economic concepts helps in explaining this fact?
A) The concept of negative externalities B) The concept of adverse selection C) The concept of free riding D) The concept of positive externalities