7. If a firm practices first-degree price discrimination, the firm must: (a) have customers with identical demand curves. (b) have complete information about each customer's unique demand curve before the customer buys the product. (c) be able to identify each customer's demand curve after the customer buys the product. (d) lack market power but know how its customers differ by their willingness to pay for the product. (e) (b) and (d) (f) (a) and (c) (g) (a) and (b) (h) (c) and (d) Answer: 7b.

7. If a firm practices first-degree price discrimination, the firm must: (a) have customers with identical demand curves. (b) have complete information about each customer's unique demand curve before the customer buys the product. (c) be able to identify each customer's demand curve after the customer buys the product. (d) lack market power but know how its customers differ by their willingness to pay for the product. (e) (b) and (d) (f) (a) and (c) (g) (a) and (b) (h) (c) and (d) Answer: 7b.

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: Monopolistic Competition

Section: Chapter Questions

Problem 3QCMC

See similar textbooks

Similar questions

1. TopGames buys the rights to sell a certain video game title worldwide. top games pay $400,000 for this right and the marginal cost of providing the video game download is zero. TopGames’ economist realizes they have two groups of customers: the 2,000 hard-core fans of this game who will pay up to $150 a year to be able to play this game; and the 10,000 casual gamers who will pay up to $50 a year to play this game. If TopGames can NOT price discriminate, what is its profit-maximizing price? What is its profit? a. Price = $50; Profit = negative $100,000 b. Price = $50; Profit = $300,000 c. Price = $150; Profit = $100,000 d. Price = $150; Profit = $500,0002. TopGames buys the rights to sell a certain video game title worldwide. top games pay $400,000 for this right and the marginal cost of providing the video game download is zero. TopGames’ economist realizes they have two groups of customers: the 2,000 hard-core fans of this game who will pay up to $150 a year to be able to play this…
10) Many restaurants offer "early-bird specials" to dinner customers. These specials consist of a significant price reduction on selected menu items purchased before some pre-determined time, e.g., 6 p.m. Is such a practice a form of price discrimination? If so, what type?
Assume that a firm accepts the following price_demand relationship as being a realistic representation of its market: d=800-10p where p must be between $20 and$70 a. How many units can the firm sell at the $20 per-unit price? At the $70 per-unit price? b. By how many units does a $1 increase decrease demand? c. Which pricing alternative the business is considering maximizes revenue? Group of answer choices $40 $30 $50
1. When a monopoly advertises, the goal is to _____ because _____. Group of answer choices increase its demand as a share of market demand; the monopoly faces a significant portion of market demand increase market demand; the monopoly faces the entire market demand increase market demand; the monopoly produces a product that is identical to the output of all other sellers in the market increase its demand as a share of market demand; the monopoly faces a small portion of market demand 2. If given a choice, a person would prefer to experience the situation of which of the following families? Group of answer choices a family with income equal to the world poverty line a family with income equal to the United States poverty line a family with income double the world poverty line a family with income equal to the poverty line in the United States in 1970 3. A business using its bargaining power as a major buyer of labor to pay lower prices, including lower wages,…
Q2. a) define the income elasticity of demand? b) what is the normal and an inferior good? c) define the cross-price elasticity of demand? d) Compare and contrast monopoly and perfect competition market structures in the Long-run.
(b) Suppose CLP Holdings Limited is a natural monopolist with constant marginal cost. Draw a diagram to indicate the profit-maximizing level of output, the profit-maximizing price, and the size of the profit.
COURSE: MICROECONOMICS 2 - MONOPOLY AND PRICE DISCRIMINATION TYPE 2 - PRICE PER CONSUMPTION BRACKETA monopolistic firm has estimated its inverse demand function as P = 200 - q and its marginal cost (MC) equal to 30.a) Estimate excess profit, with a SINGLE PRICE SYSTEM. Graphicb) Estimate excess profit if firm discriminates by bracket, defining following brackets: (0, 50), (51 to 100) (101 to 150). PLEASE GRAPHIC EACH CASE
Course: Microeconomics 2 - Discrimination type II: price by consumption levelTrue / False / Uncertain type questions 1. If a company applies strategy "take 3 and pay 2", then it can be said that it applies type II discrimination. Please justify and graph if applicable2. If a company increases its packaging capacity by 30% and its selling price by 30%, then it is not applying type II price discrimination. Please justify and graph if applicable3. If a monopolistic firm operates at full capacity, it should not apply type II price discrimination. Please justify and graph if applicable4. Type II price discrimination generates more consumer surplus than type I discrimination. Please justify with a graph
COURSE: MICROECONOMICS 2 - MONOPOLY AND PRICE DISCRIMINATION TYPE 2 - PRICE PER CONSUMPTION BRACKETA monopolistic firm charges $90 for 30 units sold; $60 for units between 31 and 60 and $30 for units between 61 and 90 and $15 for units greater than 90. Consider marginal cost (MC) equal to zero. How much is firm's extraordinary profit?(a) If it sells 15 units.(b) If it sells 53 units(c) If it sells 95 units PLEASE GRAPHIC EACH CASE
5. Conditions for price discrimination Price discrimination is the practice of charging different prices for the same product that are not justified by cost differences. Evaluate the following statement: "Price discrimination requires market segmentation." False, because the monopolist can never charge anyone their maximum willingness to pay anyway False, because the monopolist does not need to know people's willingness to pay for its goods None of these choices True, because the monopolist needs to know the willingness to pay of different groups of consumers
1. Classify the following as a government-enforced barrier to entry, a barrier to entry that is not government-enforced, or a situation that does not involve a barrier to entry. a. A patented inventionb. A popular but easily copied restaurant recipec. An industry where economies of scale are very small compared to the size of demand in the marketd. A well-established reputation for slashing prices in response to new entrye. A well-respected brand name that has been carefully built up over many years
1a) A monopolist maximizes profit by maximizing price. True False 1b) In the in an advertising "prisoner's dilemma" game,both firms end up __________________ which turns out to be ________________________ advertising; better for them both. advertising; worse for them both not advertising; better for them both not advertising; worse for them both. 1c) In the short run, if a firm shuts down, the firm's total revenue is equal to fixed cost. variable cost. total cost. zero. 1d) Suppose that demand increases in an increasing-cost industry that is in long-run competitve equilibrium.After the market has completely adjusted, the equilibrium price will be above its original level. below its original level. equal to its original level. indeterminate. 1e) Which of the following characteristics can be used to differentiate products in a specific market? Low prices. Advertising. Barriers to entry. Low costs.