Which of the following is true of perfect price discrimination?
a. Profit is lower than it would be without discrimination.
b. Revenue is higher than it would be without discrimination, but profit is lower.
c. Average revenue and average cost are both higher than they would be without discrimination, so it is not certain whether profit will be higher.
d. Consumer surplus is zero.
e. Profit is zero.
D
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Suppose an oligopoly has a dominant firm that sets the price for the entire industry. In this situation, the oligopoly has:
a. nonprice competition. b. a kinked demand curve. c. price leadership. d. a cartel.
When the price of running shoes goes from $100 to $80, the quantity demanded increases from 20 to 30 million. Over this price range, the absolute value of the price elasticity of demand is
a. 0.55. b. 1. c. 1.25. d. 1.80. e. 2.50.
Total surplus is equal to
a. value to buyers - profit to sellers. b. value to buyers - cost to sellers. c. consumer surplus x producer surplus. d. (consumer surplus + producer surplus) x equilibrium quantity.
Research around the world indicates that the underground economy grows more widely when:
a. tax rates decrease b. government regulations increase c. government corruption is on the decline d. all of the above make the underground economy grow