Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Question
Chapter 14, Problem 14.12P
a)
To determine
To find:
Social output level and welfare associated with it.
b)
To determine
To know:
Profit,
c)
To determine
To find:
Monopoly price with no discrimination.
d)
To determine
To know:
Monopoly price, quantity before and after market segmentation.
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Discuss to what extent you agree with the following statements
Price discrimination is beneficial for the society in general but it is difficult to practice in real world
using relevant examples distinguish among the three forms of price discrimination.
The necessary conditions for successful price discrimination include
1
a market that can be segmented into different buyer groups
2
the firm has market power
3
differences in customers' elasticities of demand for the product
4
all of these
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Similar questions
- What of the following statements is not true about group price discrimination? Group of answer choices it is less difficult to charge different prices to different consumers if a good is an individually provided service, such as haircuts the group of consumers with more elastic demand (as a given price) will be charged a higher price in theory the good considered must be the same, but in the real world a price discriminating monopolist may need to change the good in order to charge different prices (e.g., put it into a different container or box). Which is the best example of price discrimination? Group of answer choices Higher price for a Ford truck than for a Ford car. Different price for a car wash on Tuesday versus Wednesday Average price of a 2000 square foot home in California being higher than in South Dakota.arrow_forwardWhich of the following if true would make it harder for a firm to practice price discrimination? Group of answer choices There is a market where buyers can resell what they buy. The firm knows about differences in demand across recognizable groups. The firm has market power.arrow_forwardWhich of the following is not a requirement for a successful price discrimination strategy? A. A firm must have market power B. The firm must be able to prevent consumers who buy a product at a low price from reselling it to other consumers at a high price. C. Some consumers must have greater willingness to pay for the product than other consumers, and the firm must be able to know what prices consumers are willing to pay D. The good must be a very expensive goodarrow_forward
- Explain how perfect price discrimination could address the free-rider problem? Why then is it not implemented?arrow_forwardPrice discrimination is one of the major issues around the world and it will remain for coming years as well. the incentives towards price discrimination and the ability to price discrimination will be growing in the coming years as sellers will be increasingly tempted to engage in differential pricing. according to price discrimination theory, prices are expected to vary in response to differences in demand in different markets (third-degree price discrimination) or charges different price for different quantity of product (second-degree price discrimination). sellers are always tracking every moments of their customers to best fit their needs or to attract them to their products in the form of loyalty card, coupons, store credit card and many other forms incentives. price discrimination is, harmful to society when it leads to a misdistribution of resources meanwhile employment and income are not maximised. price discrimination is, however, also beneficial to society for it helps in…arrow_forwardExplain how the mechanism for the application of three types of price discrimination that can be effective from a firm's point of view in order to maximize its profit. You are required to provide examples to show how this can be done.arrow_forward
- One of the profit-boosting objectives of perfect price discrimination is to sell to every single customer whose marginal benefit your marginal cost. is double is less than is half exceeds.arrow_forwardSuppose you are the owner of a movie theater. There are two types of customers: senior (‘s’) and non-senior (‘ns’). You know if a customer is a senior or non-senior and so you could use price discrimination with selection by indicators. The demand for movies is: Senior: qs = 30 − 3ps Non-Senior: qns = 15 − pns 1. Plot the total demand curve and the marginal revenue curve if the two types of consumers are as one. 2. Suppose that MC = 1 and that you can only set a single price. 2a. What is the optimal uniform price? 2b. What is the profit under uniform pricing? 2c. What is consumer surplus under uniform pricing?arrow_forwardDecide whether the statement is True, False, or Uncertain, and give a brief explanation. A car rental company has been issuing coupons on the internet. Since the coupons are accessible to the general public, they cannot be a form of price discrimination.arrow_forward
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