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Price discrimination is only possible when a firm is a price

maker

In a pure monopoly. the firm Is willing to sell to anyone willing and able to pay at least the marginal cost of production.

The result is that output is produced where D = MC

When a firm charges different prices per unit for different quantities, or blocks, of a good or service. It practices second-degree price discrimination. This is most commonly done by

a pure monopoly

n a pure monopoly, the firm is willing to sell to anyone willing and able to pay at least the marginal cost Of production. The result is that output is produced where D = MC which is

allocatively

A business will charge a to the group with the relatively more elastjc demand and a higher to the group with the relatively more inelastic

elastic inelastic

Allocative efficiency is:

producing the goods and services so that their marginal benefit equals their marginal cost.

profit equals the total minus the total

revenue cost

In a pure monopoly, the firm is willing to sell to anyone willing and able to pay at least the marginal cost of production. The result is that output is produced where D MC

which is allocatively efficeient


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