A monopolist will maximize its profits by charging a higher price for customers with a price elasticity of
A) 0.1.
B) 1.
C) 1.5.
D) 10.
A
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Indicate whether the statement is true or false
One of the necessary conditions for price discrimination to occur is that:
a. buyers in different markets have different elasticities of demand. b. the demand curve is upward sloping. c. buyers must be allowed to resell the good at a higher price elsewhere. d. all of these are necessary for price discrimination to occur.
The product-variety externality is associated with the
a. producer surplus that accrues to incumbent firms in a monopolistically competitive industry. b. loss of consumer surplus from exposure to additional advertising. c. consumer surplus that is generated from the introduction of a new product. d. opportunity cost of firms exiting a monopolistically competitive industry.
When economic profits are zero, accounting profits
A. must be positive. B. will be negative. C. will equal zero. D. could be positive, negative or zero.