23 Feb

16. A monopoly will set the price

  at the highest price along the demand it faces.
  equal to the value at which marginal cost intersects the demand curve.
  so that it can sell the quantity at which marginal revenue is equal to marginal cost.
  so that it can sell the quantity at which marginal revenue is equal to zero.


A monopolist will always end up choosing to operate

  even if its profit are negative.
  on the elastic portion of the demand it faces.
  until such time as a new competitor enters its market.
  only if it can capture the entire consumer surplus.


When first-degree price discrimination is perfectly implemented social gain is maximized, with all gains going to the monopoly.



Which of the following is the best example of second-degree price discrimination?

  A car salesman attempts to discover and charge the highest price that the customer is willing to pay.
  A sub sandwich shop that gives you a half-price sandwich for every six sandwiches you purchase.
  Manufacturers’ use of discount coupons printed in Sunday newspapers.
  Polaroid cameras and film.


Third-degree price discrimination occurs when a monopoly separates its customers into distinct markets, charging a different price to each group.


manhokwe tawanda
23 Feb

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